Nigerian companies with foreign
investors is required to be registered with the Nigeria investment promotion
commission (NIPC), establish under the act. The immigration Act also requires
foreign investors to obtain business permit from the Federal Ministry of
Internal Affairs (FMIA) before operating or business in Nigeria; where a
company or its operations, an application will need to the company intends to
engage expatriates for the running of the company or its operations,
an
application will need to be made to the FMIA to obtain expatriate quota
application required to be made to particular designation or job expatriate
quota to a company, work permits known as combined expatriate residence permit
and Alien card CERPAC).
Could be applied for and issued to
the expatriate employee and officer of the company against specific designation
granted under the expatiate quota.
The application for (CERPAC) is made
to the Nigeria Immigration Service (NIS). Also, the NIS could issue temporary
work permit (IWP) to expatriate engaged for a short period on a temporary basis
by a Nigerian company.
TAX TREATIES
Nigeria has a number of tax treaties referred to as
double taxation agreements with a number of countries that are designed to
ensure that tax payable in Nigeria on the profit of Nigerians company being
remitted into the company are reduced by the amount of foreign tax paid aboard
and vice versa where an oversee been taxed in Nigeria. Some of the countries
include UK, France, Netherlands, Belgium, Canada and Pakistan.
NIGERIA
INVESTMENT INCENTIVE
Investing
in any of the sectors of the economy discusses in these doing business in
Nigeria will require enormous capital outlay. The federal government of Nigeria
taking cognizance of this fact has over the years formulated a number of
polices and measure to boost he investors confidence in the country and to
prevent the perspective investors from being consumed by the overhead cost it
will encounter.
The incentive maybe grouped into two headings:
incentive to promote local production and incentive to promote exportation.
INCENTIVE TO
PROMOTE LOCAL PRODUCTION PIONEER STATUS: This is a tax holiday status granted by the government to industries
regarded as high priority for Nigeria’s economic development. The grantee
enjoys a tax relief an initial period of 3 years renewable for a further period
of 2 years.
The industrial development (Income Tax Relief) Act cap
179, laws of Federation of Nigeria, declares a number of industries as pioneers
and any company with the categorized industries producing products declared as
pioneer may apply to the Nigeria investment promotion council to be conferred
pioneer status.
TAXES ON
FOREIGN CORPORATION
Countries attracted FDI by reducing taxes on foreign
corporations. An analysis of data on with holding tax rates on dividend of
foreign corporation suggests that higher tax rates on foreign corporation
indeed have negative effect on foreign direct investment (FDI). Specifically, a
one percent increase in tax, decreases the stock of foreign direct investment
(FDI) by so me percentage.
In the event of tax treaties, between host countries
and some source countries, tax rates were used taking into account the content
of prevailing treaties.
The fact that tax reduction or incentive are effective
in attracting FDI does not automatically men that government should pursue
attracting those bad policies.
INVESTMENT
TAX ALLOWANCE
Under this scheme, a company would enjoy a generous
tax allowance in respect of quality of capital expenditure incurred with five
years from the data of approval of the project. Dividend derived from the
manufacturing company in petrochemical and liquefy natural gas sub-sector are exempted
from tax. Companies with turnover of less N1
million are taxed as low as 20 percent for the first five years of operation it
they are into manufacturing. Dividend from companies in manufacturing sector
with turn over of less than N100
million is tax-free for the first five years of their operation.
COMPANY
INCOME TAX
Tax payable for each year of assessment of the profit
of any company at a rate of 30 percent. This includes profits accruing in,
derived from a trade business or investment. Also, companies paying dividend to
its shake holder are first obliged to pay tax on its profits at the company tax
rates. Generally, in Nigeria, company dividend or other company distribution
whether or not of a capital natural made by Nigerian company companies is
liable to tax at rate of 10 percent, however dividend, dividend paid inform of
bonus or script shares to individuals shareholder in other companies, then such
dividends are excluded from the profit for the purpose of tax computation.
Nigeria has a number of tax treaties referred to as
double taxation agreement with a number of countries. These are designed to
ensure that tax payable in Nigeria on the profit of Nigeria companies is
reduced by the amount of foreign tax paid aboard.
REFERENCES
Charles,
A. C. (1998), “The role foreign direct investment in The economic
growth and development of mineral Endowment
n African Countries” (Ghana: Fred Ama Publisher)
Edeme,
R. E. (2004) “Public Finance in Nigeria” The Nation reliable printers and publisher, Asaba.
Thomas,
A. K. (2001) “Social-economic environment impact of foreign direct investment in African mining” (Ghana: Long man group).
Kobirn,
S. I. (1979) “Revenue and recommendation” Journal of business studies (pp 67-80).
Milton,
A, I. (1998) “An introduction to modern macroeconomics,
Benin, Long man Publisher”.
Musgrave,
A. (1984) “Public Finance” theory and practice, McGraw Int. Inc. New York