Starting a Business in Nigeria

This table summarizes the procedures and costs associated with setting up a business in Nigeria.

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Standardized company

Legal Form: Private Limited Liability Company
City: Lagos

Registration Requirements Summary:


  Procedure Time to complete: Cost to complete:
1 check the availability of company name with the Corporate Affairs Commission on-line 2 days NGN 200 application form
2 Prepare the requisite incorporation documents and pay the stamp duty 7 days stamp duty included in procedure 4
3 Notarize the declaration of compliance (CAC 4) 1 day NGN 200
4 Register the company with the Corporate Affairs Commission & pay fees at the bank desk at CAC 11 days NGN 60,000 legal fees +NGN 500 incorporation forms + NGN 10,000 Incorporation fees (an extra NGN 50,000 for same-day processing) + .75% stamp duty paid on capital + NGN 500 for each additional copy of Memorandum and Articles of Association stamped + NGN 3
5 Register with the Federal Board of Inland Revenue Department of the Ministry of Finance 4 days no charge
*6 Register for personal income tax PAYE at the State Tax Office 2 days, simultaneous with previous procedure no charge
*7 LSSAA signage inspection 7 days. simultaneous with previous procedure no charge
8 Pay signage fees at a designated bank 1 day NGN 18,500
* Takes place simultaneously with another procedure.

Registration Requirements Details

Procedure 1.
check the availability of company name with the Corporate Affairs Commission on-line
Time to complete:
2 days
Cost to complete:
NGN 200 application form
Name of Agency:
Comment:
The Corporate Affairs Commission (CAC) Online System was commissioned in June 2005. The system envisaged an online search of unique company names immediately upon the purchase of an e-payment card from an accredited bank. Although this services is widely adevertised by CAC, until now the system is not fully operational either because of power fluctuation or because of lack of availability of the pre-paid cards- necessary to conduct the on-line transaction. In most vases, the applicants have to go to the CAC office to complete this procedure.
Procedure 2.
Prepare the requisite incorporation documents and pay the stamp duty
Time to complete:
7 days
Cost to complete:
stamp duty included in procedure 4
Name of Agency:
Comment:
To prepare the requisite incorporation documents, the incorporators must complete the requisite statutory forms, prepare and print the memorandum and articles of association, and have them stamped by the Federal Board of the Inland Revenue Service.
Procedure 3.
Notarize the declaration of compliance (CAC 4)
Time to complete:
1 day
Cost to complete:
NGN 200
Name of Agency:
Comment:
The declaration by the barrister or solicitor engaged in the formation of the company may be sworn to at either the State High Court for a fee of NGN 200 or at the Federal High court for a fee of NGN 20.
Procedure 4.
Register the company with the Corporate Affairs Commission & pay fees at the bank desk at CAC
Time to complete:
11 days
Cost to complete:
NGN 60,000 legal fees +NGN 500 incorporation forms + NGN 10,000 Incorporation fees (an extra NGN 50,000 for same-day processing) + .75% stamp duty paid on capital + NGN 500 for each additional copy of Memorandum and Articles of Association stamped + NGN 3
Name of Agency:
Comment:
To register the company with the Corporate Affairs Commission (CAC), the following incorporation documents are submitted:
- Name reservation and availability form.
- Memorandum and articles of association, stamped by the commissioner for stamp duties (two copies).
- Form CAC 3, Notice of registered address.
- Form CAC 7, Particulars of directors.
- Form CAC 2, Statement of share capital and return of allotment of shares.
Incorporation fees are
-NGN 10,000 for company whose nominal share capital does not exceed NGN 1,000,000, and NGN 10,000 for every NGN 1,000,000 thereafter. - N500 incorporation forms
• 1.5% stamp duty paid on capital
• N500 for each additional copy of Memorandum and Articles of Association stamped
• N3,000 for certified true copy of memorandum and articles of association
• N2,000 for certified true copy of particulars of directors
• N2,000 for certified true copy of particulars of shareholders. Moreover, NGN 60,000 is the approximate cost of company incorporation conducted by professionals ( lawyers, charted accountants of charted secretaries) accredited by CAC.
The payment can be done at the bank desk at CAC.

The Corporate Affairs Commission introduced a same-day incorporation option at an increased statutory fee (five times that of standard incorporation). In June 2005, the Corporate Affairs Commission commissioned a system for online company registration, in which registration documents and payments may be processed electronically by Commission-accredited lawyers. However, the system is not yet fully implemented.
Procedure 5.
Register with the Federal Board of Inland Revenue Department of the Ministry of Finance
Time to complete:
4 days
Cost to complete:
no charge
Name of Agency:
Comment:
The Federal Inland Revenue Service (FIRS) requires the applicant to complete tax registration forms for corporate income tax registration as well as VAT.

The company submits an application letter to the tax authority for a tax clearance certificate and, for income tax purposes, registers at the integrated tax office.

The registration process requires submitting a completed tax office–issued application (taxpayer registration input form, TRIF/2006/001 COYS) and the following documents:
- Completed FIRS questionnaire.
- Memorandum and articles of association (copy).
- Certificate of incorporation (copy).
- Directors’ names and addresses.
- Tax advisor’s name and address.
- Letter of appointment of a tax adviser and corresponding letter of acceptance.
- The date the company commenced business;
- names, addresses and mobile numbers of major promoters and the chairman of the company, including their email addresses;
- other sources of income of the chairman and the promoters of the company;
- name and addresses of the principal officers of the company including the chairman, managing director, legal adviser and accountant;

To register, the company must submit the taxpayer registration input form in triplicate, and the original certificate of incorporation must be presented for review by the controller. Upon the completed taxpayer registration input form and all other documents being received, a tax reference number is allocated. An application must be filed for the tax clearance certificate; its issuance is not automatic.

Fee schedule for tax clearance certificate:
- Registration within 6 months of incorporation: no cost.
- Registration after 6 months of incorporation (if the company has yet to start business operations):
-A pre-operation levy of NGN 20,000 for first-year requests and NGN 25,000 for each subsequent-year request, until the company files a notice of commencement of business as per amendment to section 29 of the company’s income tax of 2007.
-Companies that register after the start of operations must file a set of audited accounts. TCC is issued based on tax paid for 3 years. If the position is at a loss, the TCC will be issued to reflect the position.

Companies required to register for VAT complete the VAT registration form (VAT Form 001, obtainable free of charge from all FIRS offices) and return it to the integrated tax office, which will issue a taxpayer identification number (TIN). Companies required to register for VAT must do so within 6 months from the date of starting business operations.

Although the registration for corporate income tax and VAT are done in the same place; the integrated tax office, 2 tax numbers are issued.
Procedure 6.
Register for personal income tax PAYE at the State Tax Office
Time to complete:
2 days, simultaneous with previous procedure
Cost to complete:
no charge
Name of Agency:
Comment:
All employers shall register with the relevant state tax authority for income tax withholding. Once the application is filed, with a copy of the certificate of incorporation attached, a reference file is opened for the company.
Procedure 7.
LSSAA signage inspection
Time to complete:
7 days. simultaneous with previous procedure
Cost to complete:
no charge
Name of Agency:
Comment:
The Lagos State Government has developed a new State Law which entitles it to impose signage fees. This law is much more developed than most other State laws. The local government was divested of the power to carry out this function in January 2007 to Lagos State Signage and Advertising Agency (LSSAA). now the Signage law is enforced by LSSAA. LSSAA regulates outdoor display in business premises in Lagos State. Any company that is doing business in Lagos State that has an outdoor display in form of advertisement in the premises or any vehicle of the company must register the display with the agency. LSSAA issue the questionnaire regarding the application to erect a signboard outside business premises, etc. That questionnaire is completed by newly established businesses within the State and submitted to LSSAA, who will scrutinise the completed questionnaire and arrange for an inspection of the signboard at its location.The registration is done in two phases:
• Pre-scrutiny stage: the applicant pays the sums of N8, 500 and N6, 500 as initial fees for assessment and survey respectively.
• Formal application: the application fee is N2500. In addition a copy of the gazzette on the LSSAA is attached to the application form for a fee of NGN1,000. After the above, the application will be forwarded to the Billing and Assessment department of the agency to determine the fee payable for the issuance of the permit. The amount of fee is determined by the dimension and location of the outdoor display.
However, in most states in Nigeria, signage and related compliance issues are handled by the local government council.
Procedure 8.
Pay signage fees at a designated bank
Time to complete:
1 day
Cost to complete:
NGN 18,500
Name of Agency:
Comment: