There are several applicable rules and regulations of doing business in Nigeria. This purpose of this write-up is aimed at summarizing the steps required to carry out business in Nigeria and the rule and regulations governing businesses in Nigeria.

Business setup and operation in Nigeria are governed by various laws. These laws include but are not limited to:

  • The Companies and Allied Matters Act (This is the primary law that governs companies’ formation and maintenance in Nigeria)
  • Companies Income Tax Act
  • Value Added Tax Act
  • Withholding tax Act
  • Nigerian Investment Promotion Commission Act
  • Labour Act
  • Immigration Act
  • Immigration Regulations 2017
  • Employee Compensation Act
  • Banks and other Financial Institutions Act

There are various steps one may need to take in order to start a business in Nigeria. First and foremost, anyone who wishes to do business must have an idea of the kind of business to venture into. A business owner must be sure to ensure that the business to be pursued is one which is legitimate i.e. it must be a business which the law permits. Once one is sure that the business idea is legitimate, the next step is to register the business with the Corporate Affairs Commission (CAC).

In order to register a business, there are specific checklists that must be carried out.



Search for a Business Name: The first step is to conduct a search for the intended name of the business in order to have the name reserved. This is done in an online application to the Corporate Affairs Commission (CAC). The applicant will submit two intended names to CAC. CAC will, in turn, use the names provided to search through its database in order to make sure that the name is not already in use by another business or that the name is not similar to any other business name.

Reservation of a Business name: Once a name is approved by the CAC, then the name approved will be reserved by the CAC for 60days within which it is expected that the process for business registration would have been completed.

Prepare required documents for registration: These documents include but are not limited to:

  • CAC Form 1.1, which comprises the details of first members (shareholders) and first directors.
  • Memorandum and article of association
  • Other statutory forms detailing particulars of secretary and statutory declaration
  • Original receipts of registration fees and stamp duties.


It is worthy of note to state that any individual or corporate entity, either resident or non-resident in Nigeria can be a member of a company. However, there are restrictions if any of the individuals who are members are found to be under the age of 18. This restriction also applies if the individual, firm or company wishing to register a business has been previously involved in fraudulent trade malpractice either in local or international trade. The Registrar has the discretion to refuse such an application for registration of the business.



A business is usually profit-oriented and just like any other working individual or company, it is expected that the company will pay taxes. Some of the applicable taxes for a company operating in Nigeria include the followings:

Company Income Tax: This is the tax is levied on the income of the business. Company income tax is charged at 30% of the profit earned by the company after all allowable deductions for a company with more than N100 Million Naira annual turnover. The tax is charged at 20% for a company with a turnover between N25 Million and N100 Million.

Value Added Tax (VAT):  It is payable by the customer and is imposed on the supply of goods and services. The VAT is currently charged at 7.5%.

Capital Gains Tax: This is 10% tax imposed on capital arising from sales, exchange or any other dispositions of properties. It is charged to the chargeable assets of a business. It is triggered when an asset is sold.

Stamp Duties: This is a tax payable on instruments. The rate of this tax is dependent on the document and the value of the transaction on the face of it. It is usually charged at a fixed rate and ad valorem.

Withholding Tax: The withholding tax is usually charged at the rate of 10% to 5% of the payable sum, depending on the type of payments. The withholding tax is normally deducted at source when payment is to be made to the beneficiary. It is an advance payment of income tax.

Industrial Training Fund: The tax is charged at 1% of the company employees’ payroll. It is only applicable to a company with a minimum of 50 Million Naira turnover or having more than 5 employees.

National Social Insurance Trust Fund (NSITF): The NSITF is also charged at the rate of 1% of the company employees’ payroll. The NSITF payment is not actually a tax, but a form of mandatory insurance for the employees of all companies operating in Nigeria.

Education Tax Fund: This tax is applicable to all companies operating in Nigeria. It is levied at 2% on the profits of companies operating in Nigeria.

Petroleum Profits Tax: This tax is applicable to only companies engaging in the exploration and production of crude oil. It is charged at the rate between 50% to 85% of ascertained profits after deductions of all operational expenses.

The duty of collecting tax is vested in the 3 arms of government. The Federal Inland Revenue Service (FIRS) is the body in charge of the taxes payable to the Federal Government. The taxes payable to the state government is paid to the State Boards of Internal Revenue (SNIR). The Local Government also administers some levies, which they collect through across various councils within Nigeria.



According to CAMA, every company is expected to appoint an auditor or auditors at its annual general meeting to audit the financial statements of the company. The first auditors of a company may be appointed by the directors at any time before the company is entitled to commence business and auditors so appointed shall hold office until the conclusion of the next annual general meeting.

The appointment of subsequent auditors is done by the passing a resolution. The auditors hold office for one year as CAMA provides that the appointment of auditors is done at every annual general meeting. However, a retiring auditor can be reappointed to continue in the role as the auditor to the company.

Where at an annual general meeting there is no appointment or reappointment of an auditor then the directors of the company may appoint someone to fill the vacancy. Where the directors exercise this power, then the company is entitled to give notice to the Corporate Affairs Commission (CAC) within one week of the power becoming exercisable.



The Nigerian Investment Promotion Commission is the body in charge of promoting, coordinating and monitoring investments in Nigeria. This body is established by the Nigerian Investment Promotion Commission Act. The functions to the commission include:

  • be the agency of the Federal Government to co-ordinate and monitor all investment promotion activities to which this Act applies;
  • initiate and support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors;
  • promote investments in and outside Nigeria through effective promotional means;
  • collect, collate, analyse and disseminate information about investment opportunities and sources of investment capital
  • register and keep records of all enterprises to which this Act applies;
  • identify specific projects and invite interested investors for participation in those projects;
  • initiate, organize and participate in promotional activities, such as exhibitions, conferences and seminars for the stimulation of investments;
  • provide and disseminate up-to-date information on incentives available to investors;
  • assist incoming and existing investors by providing support services;
  • evaluate the impact of the Commission on investments in Nigeria and make appropriate recommendations
  • Advise the Federal Government on policy matters, including fiscal measures designed to promote the industrialisation of Nigeria or the general development of the economy.

The major advantage of NIPC registration is that the commission receive and process application for tax incentives for deserving companies.



An employment relationship is created when the employer and employee agree on the work to be performed, that work is performed under the supervision and control of the employer, and the employee is paid for the work. The terms and conditions of employment are defined in legislation and collective agreements. Moreover, both employer and employee have rights and responsibilities during the employment relationship and when it ends. Contracts between employer and employee are usually guided by the Labour Act.

Section 7(1) of the Labour Act requires employers to provide a contract to employees within three months of commencement of the employment relationship. The contract of employment is meant to contain

  • The names of both the employer and the employee
  • The name and address of the employee, the nature of the employment
  • If the contract is for a fixed term it should also contain the term or date in which it expires,
  • The wages to be paid to the employee should also be contained in the contract of employment, the terms and conditions relation to hours of work, holidays etc.

Either party to a contract of employment may terminate the contract on the expiration of a notice given by him to the other party of his intention to do so. The notice to be given is calculated as follows;

  • one day, where the contract has continued for a period of three months or less;
  • one week, where the contract has continued for more than three months but less than two years;
  • two weeks, where the contract has continued for a period of two years but less than five years; and
  • one month, where the contract has continued for five years or more.

The National Industrial Court is the court which is vested with the jurisdiction to handle employment matters in Nigeria.



A business permit is a document that allows a foreigner to operate a business in Nigeria. It is usually issued by the Federal Ministry of Interior on behalf of the Federal Government of Nigeria. Where a company is owned by foreigners, then it is required to obtain a business permit from the Ministry.

The requirements for obtaining a business permit in Nigeria include the following:

  • The certificate of incorporation of the applicant’s company
  • Tax Clearance Certificate
  • Memorandum and Articles of Association
  • CAC Forms CO2 and CO7
  • The shareholding of the company.
  • Joint venture agreement
  • Approval from all appropriate professional bodies. This approval depends on the type of business being carried out by the company.

In practice, a business permit is usually applied for alongside an expatriate quota. An expatriate quota in Nigeria is the approval granted by the minister of interior affairs to foreign or indigenous companies to enable foreign employees, directors or owners of businesses work in Nigeria. As part of regulatory requirements, a foreign-owned company registered in Nigeria must obtain Business Permit and Expatriate Quota from the Minister of Interior. Where an applicant is successful, the foreigner becomes certified and eligible to carry on with work or business in Nigeria. It is the Ministry of Interior Affairs that has the responsibility of issuing the expatriate quota approval in Nigeria.

Applicants can apply for as many quotas depending on the slots required. The requirements for the grant of an expatriate quota include the following:

  • Duly completed registration form
  • Incorporation documents to include a memorandum, articles of association, the share capital and the particulars of directors of the company.
  • Feasibility report to be registered with CAC.
  • Certified current audited account and bank reference letter
  • Annual income tax clearance certificate of each expatriate staff
  • Proposed annual salary to be paid to the expatriate worker indicating their designation, names, and duration of employment
  • Joint Venture Agreement (JVA) for partnership ventures between Nigerians and foreigners
  • Company’s Tax Clearance Certificate
  • Lease agreement or C of O for operating premises
  • Particulars of training programs for Nigerians
  • List of Nigerians working in the company to understudy the expatriates
  • License permit from government agencies where company engage in specialized sectors such as the oil and gas sector, telecommunications, health, etc.
  • Certificate of capital importation where Applicant wants to import capital into the country
  • Business permit

CERPAC is the acronym for Combined Expatriate Residence Permit and Aliens Card. The Nigeria Immigration Service requires foreigners living in Nigeria to get the CERPAC or they will be considered to be illegal residents and subject to repatriation from Nigeria. This card is meant to be obtained by expatriates resident and working in Nigeria. The validity of CERPAC is two years, after which application for revalidation must be made.

The requirements for obtaining CERPAC includes the followings:

  • Expatriate quota approval
  • International passport with STR visa endorsement
  • A duly completed CERPAC statutory form
  • Company’s board of directors’ resolution confirming the appointment as director (where applicable)
  • Application letter from the employer requesting Regularization of stay and accepting Immigration       Responsibility (IR) on behalf of the expatriate.
  • Letter of Appointment/Employment
  • Acceptance of the offer of Appointment/Employment.
  • Vetted Credentials
  • Payment of prescribed fees




The National Agency for Food and Drug Administration and Control (NAFDAC) was officially established in October 1992. The National Agency for Food and Drug Administration and Control Act Cap N1 Laws of the Federation of Nigeria (LFN) 2004 mandates the Agency to regulate and control the manufacture, importation, exportation, distribution, advertisement, sale and use of Food, Drugs, Cosmetics, Medical Devices, Packaged Water, Chemicals and Detergents (collectively known as regulated products). NAFDAC permits cover foods and drugs, so if a manufacturer produces any products that fall within these categories, then the product will need to be registered with NAFDAC.

If your company produces different products you will need to register each of them separately. For instance, if you own a company that produces Juice and Plantain chips you will need different NAFDAC registration numbers for each of the product.

The failure to obtain a NAFDAC approval or registration before distributing any drugs or processed food or food materials may lead to a complete seizure of such products by the government.



The Department of Petroleum Resource (DPR) is a department under the Nigerian Federal Ministry of Petroleum Resources (FMPR). It is saddled with the responsibility of exploration and importation of Petroleum products. It also oversees the safety and other regulations that relate to the exportation and importation of the products into the country. As part of its activities, the department manages the up and downstream in the Nigeria petroleum industry. DPR Permit is the license required to operate a company or facility that has to do with the Oil and Gas industry in Nigeria, the DPR is the sole body responsible to formulate Regulations and Guidelines for Oil and Gas Industry activities in Nigeria.

There are 3 categories of permits granted by the DPR for oil & gas servicing companies, which are:

  1. The General Purpose: this covers works that do not require specialized or certified competencies.
  2. Major Category: Here, applicants are required to possess relevant and verifiable technical/special skills.
  3. The specialized category: In this category, applicants are required to possess relevant and verifiable technical/special skills with different job categories like Offshore Pipeline laying and construction, Onshore Pipeline laying and construction and many others.

The companies seeking to engage in oil exploration and production may obtain different from licenses such as Oil Exploration License and Oil Mining Lease. The companies engaging in downstream sectors, especially filling station or gas plant also require separate licenses to carry out their operations.



By the provisions of the Minerals and Mining Regulation 2011, a company who is qualified may submit an application for an exploration license.  A mining lease has a duration of 25 years and can be renewed. The grant of Mining Lease is coordinated by the Federal Ministry of Mines and Steel Development (MMSD) under the Mining Cadastre Office approving same. It is also very instructive to note that applications for a mining lease in Nigeria must strictly comply and conform to requirements and procedures under the laws that regulate the sector, which include the Nigerian Minerals and Mining Act, 2007 and the Minerals and Mining Regulation 2011.


Money Lending License is a license which is granted to individuals or corporate bodies who intend to go into the business of lending money. For an individual or a company to become a legitimate money lender then the individual or company must first apply to get a money lenders license.

In Lagos State, Nigeria, the first step is to make a formal application to the chief magistrate within the magisterial jurisdiction where the business will be carried out. After this is obtained from the court, the applicant is to make a formal application to the Ministry of Home Affairs and Tourism with the relevant documents. And lastly, a visitation and physical inspection will be carried out in the company.



There are several licenses applicable to business operation in Nigeria. The type of business to be engaged will determine the type of applicable license. For instance, an organization seeking to engage in banking, leasing and payment service providers shall require separate licenses issued by the Central Bank of Nigeria (CBN), although a CBN’s prior approval (approval in principle) must be obtained before a proposed company subjected to a CBN licensing can be incorporated with the CAC. A company seeking to engage in export must also obtain an Export License from the Nigerian Export Promotion Council.



Opening of a bank account is very crucial to business operation. The Nigerian bank accounts can be opened in Naira, Dollars, Euro or Great British Pounds (GBP). Having a bank account enables companies to easily run its businesses. It also enables foreign investors to obtain the Certificate of Capital Importation.

The procedure for opening a business account include:

  1. Select a bank
  2. Fill out the application form and attach required documents such as passport, means of identification etc.
  3. Provide the bank with your business license and business registration documents
  4. Provide the bank with your Tax ID Number.



The procedure for doing business in Nigeria must commence with the business registration with the Corporate Affairs Commission. Upon the business registration, a company is expected to obtain the Tax Identification Number (TIN), which is a mandatory requirement for a bank account opening by the company.

A registered company may also be required to obtain certain licenses applicable in various sectors of the economy. For instance, any company seeking to engage in oil and gas operation must be duly licensed by the Department of Petroleum Resources.

For a registered company to be in good standing and operate without hiccups, it must comply with all other statutory requirements governing business operations in Nigeria, especially the tax statutes.


By Corporate & Commercial Law Team at Resolution Law Firm