Like every other country, there are rules and regulations of business in Nigeria. There are also some basic legal requirements for starting a business in Nigeria.
Here in this post, we are going to list out and discuss top 13 business laws in Nigeria. We hope you appreciate and find this informative.
Before one embarks on a business in any country, you will have to know what the law says concerning the business in that country.
Every law abiding country or state has specified and laid down laws that govern the running of the country, this includes business wise also.
Same thing is also applicable in Nigeria. We have stipulated laws which govern the running and establishing of a business. Any business not legally recognized by the law is always seen as a fraudulent business and the law takes its course on such business.
Just as everyone will love to get into a business that brings profit daily, yet before you can operate effectively without fear of disturbance or harassment, you have to fulfill the law concerning business.
The intention of any government and other approved bodies who set regulations to run businesses are so that there can be assured of quality and level playing ground for all.
There are various laws guiding business in Nigeria, most of them are adhered to and most of them not paid attention to, some are not even popular but they are there to but due to lack of knowledge and bodies to enforce the laws, it just becomes a written note. But we will discuss these laws in this article.
Read Also: 20 Best Home Based Business Ideas in Nigeria
Some Nigeria Business Laws:
1. The Companies Income Tax Act
This Act provides for the imposition of tax on companies, and that tax shall be payable, for each year of assessment, at specified rates on the profits of any company, accruing in, derived from, brought into or received in Nigeria.
Companies Income Tax is chargeable at a rate of 30% of a company’s profits. Newly registered companies have up to 18 months after registration, or no later than six months after the end of the first accounting period, whichever is earlier, to file tax returns.
In addition to the above, the Act mandates a person (i.e. a body corporate or incorporate, government ministry, department etc) to deduct at source withholding tax at the rates specified.
The Companies and Allied Matters 1990 is the company law of Nigeria. This law regulates the different ways in which business may be carried out and is divided into three parts, each part dealing with one of those ways. The parts are Companies, Business Names, and Incorporated Trustees.
Registration of businesses under the Act is carried out by and at the Corporate Affairs Commission (CAC) the head office of CAC is in Abuja, the capital of Nigeria.
3. Personal Income Tax
The legal framework for the taxation of individuals and unincorporated entities in Nigeria is the Personal Income Tax Act (PITA), CAP, LFN 2004 as amended.
PITA is administered by the state governments except in respect of persons employed in the Nigerian armed forces and the police other than in a civilian capacity; officers of the Nigerian foreign services; residents of Abuja; and non-residents who derive income from Nigeria.
4. Capital Gains Tax
The Capital Gains Tax Act regulates capital gains tax in Nigeria. Capital gains tax is payable on gains that accrue to any person on a disposal of assets for the year of assessment.
The tax is chargeable on all forms of property (including options, debts, incorporeal etc) whether or not it is situate in Nigeria.
It is, however, useful to state that capital gains tax will be charged on assets situated outside Nigeria if any amount thereof is received or brought into Nigeria.
The rate of capital gains tax is 10%. Capital gains tax is not chargeable on gains arising from the acquisition of the shares of a company that is either taken over, absorbed or merged.
The following organizations and government bodies are exempt from paying capital gains:
Ecclesiastical, charitable or educational institutions of a public character;
Any statutory or registered friendly society;
Any cooperative society under the cooperative society’s law of any state;
Any trade union registered under the Trade Unions Act; and
Local government councils.
5. Labor Law
The main law that governs the labor sector in Nigeria is the Labor Act. The Act, however, is limited in scope to persons who are defined as “workers” – i.e. persons who do not exercise any administrative, executive, technical or professional functions; in other words, the Act is only applicable to junior level workers performing manual labor or clerical duties.
The employment of all other professional employees is governed by their individual contracts of employments and policies and procedures of the company incorporated by reference to their respective contracts of employment. Trade Unions.
Read Also: 50 Untapped Business Ideas in Nigeria
6. Employee safety Law
The Factories Act and the Employees’ Compensation Act (ECA) seek to protect employees working in potentially hazardous conditions and to regulate the payment of compensation to employees who are injured in the course of their employment.
The Factories Act requires factories whose employees are exposed to occupational hazards to be registered and also provides regulations for the safety of workers, as well as imposing penalties for any breaches of the regulations.
The ECA stipulates a specific set of categories of workplace injury for which an employer will be liable to the employee; it also regulates the payment of compensation to those employees (both in the public and private sectors) who are injured in the course of their employment.
Finally, the ECA establishes the Employees’ Compensation Fund, into which employers are required to make prescribed contributions.
The fund is managed by the Management Board of the Nigeria Social Insurance Trust Fund, in the interest of employees and employers.
7. The Nigerian Investment Promotion Commission Act (NIPC Act LFN 2004)
The NIPC was established as by the NIPC Act as a “one-stop” agency that coordinates all investment promotion activities in Nigeria.
Repatriation of funds by investors: The NIPC Act guarantees that foreign investors are able to transfer their capital, profits and dividends (less 10% withholding tax) attributable to their investments, in any convertible currency unconditionally through an authorized dealer.
Funds can be repatriated abroad to the place from which they were imported to Nigeria through the appropriate channels, and a Certificate of Capital Importation (CCI) is then issued to the importer of the funds. However, the funds must have been imported for the purpose of investment in a lawful enterprise.
8. The Foreign Exchange (Monitoring & Miscellaneous Provisions)LFN 2004 (Forex Act)
The Forex Act provides that no foreign currency imported into Nigeria will be seized, forfeited or expropriated by the government except as provided under the Act.
Investments made in foreign currency are imported through an authorized dealer and converted into naira at the official exchange rate. The authorized dealer subsequently issues a CCI to the investor as evidence of the capital importation.
The CCI guarantees to the shareholders and investors the unconditional transfer or repatriation of their profits, dividends, etc which is attributable to their investment through the Nigerian banks overseas.
9. Public-private partnerships laws
Due to the growing demand for infrastructural development, partnerships with the private sector have become an increasingly viable option to successive governments, both at the state and federal levels.
As a result, in recent years legislation has been enacted to regulate the participation of the private sector in the development and maintenance of public infrastructure.
In the most states, the state government has established the Office of Public-Private Partnerships (PPP Office) and its duty is to promote infrastructural and service development in the State.
The PPP Office is charged with initiating the procurement of PPPs for the development of public infrastructure and public assets by conducting a pre-qualification process for private investors who are interested in entering PPP arrangements with the state.
The PPP Office also determines the framework for the engagement of consultants, specialists and advisers for PPPs.
10. The Investments and Securities Act 2007
This Act establishes the Securities and Exchange Commission as the apex regulatory authority for the Nigerian capital market and regulates the market to ensure protection of investors, maintain fair, efficient and transparent market and reduction of systemic risk.
Overtime, the Nigerian corporate legal system has placed much emphasis on corporate governance. The Companies and Allied Matters Act makes general provisions on the duties of the Board of Directors. The essence is to promote greater accountability on the part of directors of private companies and public office.
To this end, two codes of corporate governance were made:
- The Code of Corporate Governance for Banks and other Financial Institutions
- Code of Corporate Governance in Nigeria (2011 SEC Code)
Read Also: How to Start Taxify Business in Nigeria
11. Local Government Permits and Levies
The Local Governments oversees several permits such as, Waste Disposal, Environmental Permits, etc. They take these levies seriously and can be quite persistent with collection. Default in payment of levies can lead to threat of closure of your premises.
These regulations sometimes require some professional assistance from lawyers, accountants and other professionals as the regulation requires.
12. Telecommunications Laws
The current focus of telecommunications law, practice and regulation in Nigeria is on the quality of service, the creation of an equal playing field, and the encouragement of healthy competition among private providers.
Competition has put enormous pressure on the operators, who are now constantly upgrading their infrastructure with the aim of improving coverage and quality (albeit not always successfully).
With the benefit of hindsight, it is now clear that the Nigerian government introduced competition into the telecommunications sector by the enactment of the Nigerian Communications Act of 1992, while establishing the Nigerian Communications Commission (NCC) with the mandate to create a regulatory environment for the supply of telecommunications services and the facilitation of the entry into the market of persons wishing to supply such services.
The Act permits private sector participation in several of the deregulated telecommunications undertakings including the operation of public pay phones, the operation of public mobile communications and the operation of community telephony.
13. Electronic Commerce Bill
Electronic Commerce: The Electronic Commerce (Provision of Legal Recognition) Bill of 2008 is modeled after the UNCITRAL model law of 1996 on ecommerce and incorporates some of the provisions of the UNCITRAL Model Law on E-Commerce and E-Signatures.
The bill provides for the legal recognition of electronic commercial transactions where parties have, either expressly or by conduct, accepted a contract through electronic means; and that where there is such consent in the formation of contracts, the communication, acceptance and revocation of proposals may be expressed by electronic messages.
The requirements of writing, signature and affixation of seals are deemed to be complied with when done electronically.
Most of these laws are embedded under a specific name; we had to broaden most of them. As your business concern may be, it is necessary to seek the law guiding it and then follow it through to make your business a legal business.IMPORTANT!: Follow us on Instagram @InfoGuideNigeria
Click here to Read Latest News in Nigeria