Banking, Finance and Exchange Control Foreign exchange transactions are governed by the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act ( Forex Act ) as well as the Foreign Exchange Manual ( Forex Manual ) and other circulars and guidelines issued by the Central Bank of Nigeria pursuant to its powers under the Central Bank of Nigeria Act 2007. In broad terms, the Forex Act sets out a general framework for the foreign exchange regime in Nigeria and largely liberalised the foreign exchange market. Notably, the Forex Act also guarantees repatriation of investment funds imported into Nigeria through an ‘authorised dealer’ (i.e. a licensed bank) and converted into a local currency (NGN or Naira). Under Nigerian law, capital can be imported either in the form of cash, equipment/machinery or raw materials. A “Certificate of Capital Importation” ( CCI ) is then issued by the authorised dealer (within 24 hours) upon production of the required documents by the importer. A CCI holder is entitled to then approach the authorised dealer to convert and repatriate investment proceeds (or the investment) in freely convertible currency at the official exchange rate. Tax Depending on whether a company is engaged in petroleum or non-petroleum activities, a Nigerian company will be subject to either the Companies Income Tax Act or the Petroleum Profits Tax Act 2004 (as amended) ( PPTA ). Thus, the main taxes applicable to Nigerian companies are as follows: Companies’ Income Tax For companies not engaged in petroleum exploration activities, a tax of 30% on yearly income and The income of non-resident companies will be taxed by Nigeria if: • the non-resident has a fixed base of business in Nigeria; • the non-resident has a dependent agent in Nigeria; or • the non-resident operates a turnkey project in Nigeria. Only the net income of the non-resident attributable to its Nigerian operations is taxed. Petroleum Profits Tax Petroleum Profits Tax ( PPT ) is the taxation imposed on the profits from the winning of petroleum in the course of petroleum operations in an accounting period. As defined by PPTA, petroleum operations include the winning, obtaining, and transportation of petroleum or chargeable oil in Nigeria by or on behalf of a company for its own account by any drilling, mining, extracting or
For long-term assignments, the prospective employer must apply for a “subject-to-regularisation” ( STR ) visa, confirming that the expatriate quota has not been filled and stating the position to be occupied by the prospective employee. Upon arrival in Nigeria, the employee will need to validate his or her visa by applying for a work and residence permit. Expatriate quota positions are usually granted for a period of two years and are subject to renewal. Once a foreigner with an STR visa enters Nigeria, the foreigner must apply for a residence permit. The Pension ReformAct ( PRA ) is the primary legislation regulating pension administration in Nigeria. The PRA seeks to encourage participation in the ‘contributory pension scheme’, which applies to employees in the public and private sectors. The total minimum contribution shall not be less than 18% of the employee’s monthly pay, with 10% coming from the employer and 8% from the employee. Also, in the case of private sector organisations with fewer than 3 employees, participation in the scheme is governed by guidelines issued by the National Pension Commission. Real Estate The Land Use Act generally prescribes that all land comprising a state in Nigeria is vested in the governor of that state on trust for the benefit of Nigerians. Thus, the concept of freehold interest over land has been abolished in favour of a leasehold interest (the right of occupancy) which, by convention, is granted for 99 years. Transfer of any interest in land (including by sale, lease or mortgage) is subject in all instances to the governor’s consent. Compulsory acquisition of land is only permitted in specific circumstances which usually evince an overriding public interest. With respect to ownership of land by foreigners, the Land Use Act further provides that the National Council of State may make regulations relating to the transfer of any rights of occupancy, and the conditions applicable to the transfer of such rights to non-Nigerians. However, as of today, the Council is yet to make any regulation governing the ownership of rights in land in Nigeria. Nevertheless, some states have enacted specific Acquisition of Lands by Aliens laws. Thus, in Lagos state foreigners are permitted to acquire interests in land provided that the prior approval of the Governor is obtained (in addition to the post-acquisition consent required under the Land Use Act).
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