Introduction

Entrepreneurs seeking to do business in

Nigeria will have to comply with all

requirements needed to properly establish

their enterprise in Nigeria.

Nigeria is basically a free enterprise country,

subject only to such regulations as are

necessary for national interest.

Launching the business

Determine Your Business Structure: Consider

the following factors;

a. The level of control you want to have over the

business.

b. The level of formality you need within the

organisation.

c. The need to protect oneself against liability for

business actions.

Launching the business

d. The ability to attract investors.

e. Tax considerations for both you and your

investors. The Companies and Allied Matters

Act (CAMA) provides under different parts,

for the following types of business

organisations:

Launching the business cont..

Part A

Limited Liability Company

Unlimited Liability Company

Company Limited by Guarantee

Part B

Business Name registration for:

Partnership/Firms

Sole proprietorship

Launching the business

Part C

Incorporated Trustees

Foreign Company

Representative Office

Relevant Government Agencies

Corporate Affairs Commission

Federal Inland Revenue Service

The Corporate Affairs Commission

The Corporate Affairs Commission is

established and empowered under the

Companies and Allied Matters Act to

provide for the incorporation of companies

and other incidental matters, registration of

business names and the incorporation f

trustees of certain communities, bodies and

associations.

Federal Inland Revenue Service

The object of the Federal Inland Revenue

Service (FIRS) shall be to control and

manage the different taxes and laws given

by the National Assembly or other

regulations made by the Government of

the Federation and to account for all taxes

collected.

Taxation in your business plan

What taxes am I liable to pay?

Taxes follow businesses as surely as night follows day. So every business must expect to pay

taxes at the end of each year. But one of the

frequent complaints of business owners and managers in Nigeria is that they frequently do

not know what taxes they are liable for and to

whom it should be paid.

While ignorance of the law (taxation is a

matter of law) is no excuse, our experience

in Nigeria will seem to justify the

complaints. Frequently, different agents of

the various tiers of Government show up or

accost businesses demanding one kind of

tax, levy, charge or the other.

Taxation

Currently, under the Nigerian law, taxation is

enforced by the three tiers of government

i.e Federal , State and Local government.

In preparing your business plan all these

taxes have to be considered where

applicable.

Taxes to be collected by

the Federal Government

1. Companies income tax – This tax is payable

annually on the profits of the business. The tax is 30%

of the profit of the company.

2. Withholding tax (on companies, residents of the

Federal Capital Territory, Abuja and non-resident

individuals) – is the advance payment of income tax

by deduction at source of that income.

3. Petroleum profits tax.

Taxes to be collected by

the Federal Government

4. Value added tax (VAT) – paid by a business on purchases is called input tax. On company sales, it is called output tax. It is 5% of all taxable goods and services. It is a consumption tax. 5. Education tax – An education tax of 2% of profits must be paid by all companies registered in Nigeria. 6. Capital gains tax (on residents of the Federal Capital Territory Abuja, bodies corporate and non-resident individuals) – This is calculated yearly and covers all profits to a taxpayer from the sale or lease or other transfer fights which are subject to a capital gains tax of 10%.

Taxes to be collected by

the Federal Government

7. Stamp duties on bodies corporate and residents of

the Federal Capital Territory, Abuja.

8. Personal income tax in respect of:

(a) members of the armed forces of the Federation;

(b) members of the Nigerian Police Force; (c) Residents of the Federal Capital Territory, Abuja; and

(d) Staff of the Ministry of Foreign Affairs and non-resident

individuals

Taxes and levies to be collected

by the State Government

1. Personal income tax in respect of a. Pay-As-You-Earn (PAYE); and b. Direct taxation (self-assessment) 2. Withholding tax (individuals only) 3. Pools betting and lotteries, gaming and

casino taxes. 4. Road taxes.

Taxes and levies to be collected

by the State Government

5. Business premises registration fee in respect of

a. Urban areas as defined by each State,

maximum of:

(i)N10, 000 for registration; and

(ii) N5, 000 per annum for renewal

of registrations; and

6. Capital gains tax (individuals only)

Taxes and levies to be collected

by the State Government

7. Stamp duties on instruments executed by

a. individuals

b. Rural areas:

(i) N2, 000 for registration; and

(ii) N1, 000 per annum for renewal

of registration

8. Development levy (individuals only) not more than

N100 per annum on all taxable individuals.

Taxes and levies to be collected

by the State Government

9. Naming of street registration fees in the State

Capital.

10. Right of Occupancy fees on lands owned by the

State Government in urban areas of the State.

11. Market taxes and levies where State finance is

involved.

Registration of business

In preparing your business plan ensure

the following procedures are well spelt

out to ensure your business is always

on the right side of the law:

Registration of business

1. Register your Company – The FIRS requires

applicants to complete tax registration forms and

get a tax identification number (TIN). This is

submitted to the FIRS office nearest its place of

business or registered office.

2. Complete the VAT registration form (VAT form

001) and return it to the nearest tax office.

Registration of business

Register for personal income tax at the

State Tax Office. Once the application is

filed, with a copy of the certificate of

incorporation attached, a reference file is

opened for the company.

WHO WINS?