Foreign Participation in Nigerian Business

Introduction

Foreign participation in Nigerian business experienced a major transformation in 2025. Nigeria’s foreign investment policy now allows investment in nearly all sectors, except those on the official “negative list” under the Nigeria Investment Promotion Commission (NIPC) Act. As a result, international investors now have broader access to Nigeria’s growing economy.

However, regulatory reforms, tax changes, and the shift to a new incentive framework have reshaped the operating environment. Therefore, foreign companies must understand these developments to remain compliant and competitive. This guide explains the legal foundations, regulatory updates, and 2026 changes that directly affect foreign participation in Nigerian business.

CAMA 2020: The Legal Foundation for Foreign Participation

The Companies and Allied Matters Act (CAMA) 2020 forms the legal backbone of foreign participation in Nigerian business. It sets clear rules for how foreign companies can operate in Nigeria.

Section 78(1): The Core Requirement

CAMA provides that any foreign company intending to carry on business in Nigeria must first incorporate a separate Nigerian entity.

In simple terms, a foreign company cannot legally operate in Nigeria until it completes incorporation with the Corporate Affairs Commission (CAC). Before incorporation, the company may only receive notices or take steps preliminary to registration.

What this means: Foreign participation in Nigerian business requires local incorporation with the Corporate Affairs Commission (CAC). Without it, any business activity is unlawful.

Section 78(2): Legal Consequences

CAMA goes further by stating that any act carried out in violation of this requirement is void. Therefore, contracts, transactions, and operations conducted before incorporation have no legal effect.

Section 79: Penalties for Non-Compliance

Foreign companies that fail to comply with incorporation requirements commit an offence. In addition, the law holds company officers and agents personally liable if they authorise or permit the default.

Furthermore, where the violation continues, the law imposes daily penalties until the company complies. As a result, early compliance is not only advisable but essential.

Section 80: Exemptions for Foreign Companies

However, CAMA allows certain foreign companies to operate without incorporating a Nigerian entity. These exemptions apply to:

• Foreign companies invited by or approved by the Federal Government to execute a specific project
• Foreign companies executing donor-funded loan projects
• Foreign government-owned companies engaged solely in export promotion
• Engineering consultants and technical experts working on approved specialist projects

Even so, these exemptions require Federal Government approval and are narrowly applied.

Recent CAMA Amendments

CAMA has also evolved to improve corporate flexibility. Section 127(1), as amended, now allows a company to increase its share capital through a board resolution, subject to the company’s Articles of Association.

Previously, only shareholders in a general meeting could approve such increases. This change simplifies corporate restructuring and supports faster capital raising for foreign investors.

Digital Transformation:

The CAMA has been amended to provide for virtual meetings, electronic share certificates and increases in a company’s share capital by a resolution of the board of directors, as opposed to a resolution of the company’s members at a general meeting.

Capital Requirements for Foreign Direct Investment

Minimum Share Capital

Any company with foreign participation in Nigerian business must have a minimum share capital of ₦100,000,000 (One Hundred Million Naira). This rule applies regardless of ownership structure. Whether the foreign investor owns 100%, 50%, 10%, or even 1%, the company must meet this capital threshold.

In other words, even a single foreign director or shareholder triggers the ₦100 million requirement.

Important Clarification on Share Capital Distribution

The ₦100 million refers to the company’s total share capital, not just the foreign investor’s portion. However, only the foreign shareholder’s contribution must be backed by a Certificate of Capital Importation (CCI).

For example, if a company has ₦100 million in share capital:

• A foreign investor may own ₦20 million, which requires a CCI.
• A Nigerian partner may own ₦80 million, which does not require a CCI.

Certificate of Capital Importation (CCI)

A foreign investor must import capital through an authorized dealer, such as the Central Bank of Nigeria (CBN) or a licensed commercial bank. Afterward, the investor receives a Certificate of Capital Importation (CCI).

This certificate guarantees:

• Unrestricted repatriation of capital and profits
• Legal protection against expropriation

The NIPC Act: Regulating Foreign Investment

Section 17: The Right to Invest

Section 17 of the Nigeria Investment Promotion Commission (NIPC) Act confirms that non-Nigerians, whether individuals or companies, may invest in and operate any enterprise in Nigeria—except those on the negative list.

The Negative List: Restricted Sectors

Nigeria restricts foreign investment in only a few sectors. These include:

• Arms and ammunition
• Narcotic drugs and psychotropic substances
• Paramilitary and military wears and accoutrements

Outside these sectors, foreign participation in Nigerian business remains broadly permitted.

NIPC Registration: Now Mandatory With Annual Renewal

2024 Regulatory Update

Effective October 1, 2024, the NIPC introduced new registration fees. More importantly, annual renewal of NIPC registration became mandatory from January 1, 2025.

As a result, foreign-owned companies must now renew their NIPC registration every year by paying the prescribed fee. Failure to renew may lead to loss of registered status and the inability to access investment incentives and legal protections.

This change marks a significant shift. Previously, companies registered once and remained registered indefinitely. Now, annual compliance is compulsory.

Who Must Register with NIPC

In addition to CAC incorporation, only companies with foreign investment must register with the NIPC under Section 20 of the NIPC Act.

Immigration and Work Requirements

Foreign participation in Nigerian business often involves relocating investors, directors, or technical staff. Therefore, understanding Nigeria’s immigration framework is essential before commencing operations.

Visa Processing Timeline — 2026 Update

Nigeria’s visa system has changed significantly. Although the Immigration Act 2015 established the legal framework for entry procedures, it did not set specific processing timelines. As a result, approval periods previously varied by visa type and application location.

However, in May 2025, Nigeria introduced a modern electronic visa (e-Visa) system. This platform aims to streamline approvals, with a target turnaround time of two business days.

Importantly, this timeline reflects a government efficiency goal rather than a statutory guarantee. Before this upgrade, the Visa on Arrival process followed a similar two-day target. The new e-Visa system has now replaced it entirely.

Expatriate Quota Requirement

Any foreign investor planning to operate in Nigeria must consider workforce mobility. Therefore, companies with foreign participation must obtain an Expatriate Quota from the Minister of Interior.

In addition, immigrant workers must secure residence permits that allow them to work legally and remit their earnings abroad. Furthermore, a company wholly owned by foreigners must obtain a Business Permit before commencing operations in Nigeria.

Residence Permits & CERPAC

A Residence Permit is issued to a foreigner who enters Nigeria using a Subject to Regularization (STR) Visa. After entry, the individual must change their immigration status from visitor to resident by obtaining the permit.

Typically, the Residence Permit is valid for two years and is renewable. However, a foreign investor who consistently meets the required capital investment threshold may qualify for a Permanent Residence Permit, provided the capital remains in Nigeria and all regulatory conditions are met.

CERPAC stands for Combined Expatriate Residence Permit and Alien Card. The Nigeria Immigration Service requires all foreign residents to obtain CERPAC. Without it, individuals may be considered illegal residents and face repatriation.

Business Permit: Operating as a Foreign Company

Every company with foreign participation in Nigeria must secure this permit before commencing business activities.

Application Process:

• Applications submitted through the Ministry of Interior
• Required for the legal operation of foreign companies in Nigeria
• Must be obtained after CAC registration and NIPC registration

Tax Obligations for Foreign Investors

Foreign participation in Nigerian business comes with defined tax responsibilities. As a result, foreign-owned companies must understand their tax exposure and comply with Nigeria’s tax laws from the outset.

Company Income Tax (CIT)

Foreign companies operating in Nigeria are subject to corporate income tax unless they qualify for specific exemptions or incentives. The standard rate is 30%, while small companies pay 0%, and certain companies are subject to a 15% minimum effective tax rate (ETR). Therefore, structuring investments properly can significantly affect tax outcomes.

Withholding Tax

Withholding tax applies to dividends, interest, royalties, and service fees. In most cases, the applicable rate is 10%, unless a tax treaty or statutory exemption provides relief. This tax is usually deducted at source and remitted to the tax authority.

Value Added Tax (VAT)

Businesses with annual turnover exceeding ₦25 million must register for VAT and charge 7.5% on taxable goods and services. Failure to register or remit VAT can attract penalties and interest.

Tax Identification Number (TIN)

Every incorporated company must register with the tax authority and obtain a Tax Identification Number (TIN). This number is required to:

• file tax returns,
• obtain regulatory approvals, and
• register with State Inland Revenue Services.

2025 Tax Reform Updates

MAJOR UPDATE — Tax Bills Signed Into Law (June 2025)

On June 26, 2025, Nigeria enacted four landmark tax reform laws. These bills are now fully in force and collectively reshape Nigeria’s tax system for both domestic and foreign investors.

Nigeria Tax Act (NTA)

The Nigeria Tax Act consolidates all federal tax laws into a single framework. This reform eliminates overlapping provisions, improves clarity, and simplifies compliance. As a result, businesses now operate under one unified tax code instead of multiple fragmented statutes.

Nigeria Tax Administration Act (NTAA)

The NTAA introduces a uniform system for tax administration across federal, state, and local governments. It standardizes filing procedures, strengthens audit and enforcement processes, and enhances taxpayer protections, making compliance more predictable for foreign investors.

Nigeria Revenue Service Act (NRSA)

This Act replaces the Federal Inland Revenue Service with the Nigeria Revenue Service (NRS). In addition to collecting taxes, the NRS now manages certain non-tax revenues and operates under stronger accountability and transparency standards.

Joint Revenue Board Act (JRBA)

The JRBA restructures the Tax Appeal Tribunal and establishes a Tax Ombudsman. Together, these institutions provide clearer channels for resolving disputes and protecting taxpayer rights.

Implementation Timeline

These laws take effect on January 1, 2026, following a six-month transition period. During this time, businesses and regulators are aligning systems, procedures, and compliance frameworks.

Key Changes Affecting Foreign Investors

Small company tax exemptions have expanded. Companies with annual turnover of ₦50 million or less and total fixed assets not exceeding ₦250 million are now exempt from Companies Income Tax (CIT), Capital Gains Tax (CGT), and the new Development Levy.

At the same time, corporate income tax rates are falling. The rate reduced to 27.5% in 2025 and will decline further to 25% from 2026, improving Nigeria’s competitiveness for foreign investment.

Nigeria has also introduced a new 4% Development Levy on assessable profits, excluding small companies. This levy replaces:

• the Tertiary Education Tax,
• the IT Levy,
• the NASENI levy, and
• the Police Trust Fund levy.

As a result, companies now deal with a single consolidated charge instead of multiple levies.

Meanwhile, VAT remains at 7.5%, with expanded exemptions covering essential goods and services such as food items, medical services, pharmaceuticals, educational fees, and electricity.

In addition, Capital Gains Tax thresholds have changed. Share sales up to ₦150 million within any 12-month period are now exempt, and gains remain tax-free if they do not exceed ₦10 million.

Finally, the Federal Inland Revenue Service has been replaced by the Nigeria Revenue Service (NRS), which now operates with a broader mandate and improved transparency. This reform strengthens tax administration and enhances investor confidence.

Investment Incentives Available to Foreign Companies in Nigeria

CRITICAL UPDATE: Pioneer Status Ending (November 2025)

Effective November 10, 2025, the federal government announced that it will stop receiving applications for the Pioneer Status Incentive (PSI). This means that corporate organisations and businesses will no longer enjoy the three-year tax-free incentives for new companies coming to do business in the country.

The Nigerian Investment Promotion Commission (NIPC) stated that the move is part of its preparations for the full implementation of the new Economic Development Tax Incentive (EDTI) scheme, which will officially take effect on January 1, 2026.

Deadline Passed: Companies seeking to benefit from PSI were required to submit applications on or before November 10, 2025. If you missed this deadline, PSI is no longer available.

What This Means: The New EDTI Scheme (Effective January 1, 2026)

The Economic Development Tax Incentive (EDTI) under the Nigeria Tax Act 2025 replaces the Pioneer Status Incentive with a performance-based system. Instead of tax holidays (exemptions), eligible companies will now receive tax credits equal to 5% of their Qualifying Capital Expenditure (QCE), granted annually over five years.

Key Differences Between PSI and EDTI:

Pioneer Status Incentive (PSI) – Now Ending:

• Three-year tax-free period, extendable for one or two additional years (maximum five years total)
• Tax holiday approach (complete exemption from CIT)
• Limited post-grant monitoring

Economic Development Tax Incentive (EDTI) – New System (Effective January 1, 2026):

• 5% annual tax credit on Qualifying Capital Expenditure for five years
• Performance-based framework with stricter entry criteria and higher investment thresholds
• Renewable energy manufacturing has been newly added to eligible sectors, while telecoms and e-commerce are excluded, reflecting a pivot to industrial and emerging sectors
• Stricter accountability and performance monitoring

Companies Granted PSI Before Deadline:

Those granted EDTI before a sector’s sunset period will retain benefits until the end of their term. Existing PSI beneficiaries can keep their benefits, but new applications must be under the EDTI framework starting January 1, 2026.

Duty Drawback Scheme

The Duty Drawback Scheme provides for refunds of duties and surcharges on raw materials (including packing and packaging materials) used for the manufacture of products upon effective exportation of the final products.

The scheme offers automatic refunds of 60% on initial screening by the Duty Drawback Committee, provided a bond is presented from a recognised bank, Insurance Company, or other financial institution.

Requirements:

• Import Bill of Entry
• Import Bill of Lading for raw materials
• Letter of Contract Agreement
• Current Registration Certificate with NEPC
• Export Bill of Entry
• Bank Bond (60% of the amount claimed)

Double Taxation Agreements

Nigeria has signed various double taxation treaties with multiple countries to prevent taxing the same income twice. Foreign companies should verify if their home country has a treaty with Nigeria before committing significant capital.

Capital Repatriation & Profit Remittance

Benefits accrue to an alien importing capital/foreign loan through an authorised dealer (Central Bank of Nigeria or any commercial bank it licenses) and who has obtained Certificate of Capital Importation, including unrestrained/easy repatriation of capital/profit to home country without expropriation.

Customs & Trade Facilitation

The Customs and Excise Management Act (CEMA) was amended to provide for a technology-based single-window platform for lodging all required documents regarding importation, exportation, and transit, thereby fulfilling all import, export, transit-related, and other regulatory requirements.

Step-by-Step: Foreign Company Participation in Nigeria

1. Understand the Negative List – Confirm your sector is not prohibited under Nigerian law.
2. Form a Nigerian Company – Register with the Corporate Affairs Commission (CAC) with a minimum ₦100 million authorized share capital.
3. Import Capital – Bring in foreign capital and obtain a Certificate of Capital Importation (CCI) through an authorized dealer (CBN-licensed bank).
4. Register with the NIPC – Mandatory for all companies with foreign participation.
5. Obtain a Business Permit – Issued by the Ministry of Interior for foreign-owned or foreign-participated companies.
6. Get a Tax Identification Number (TIN) – Register with the Federal Inland Revenue Service (FIRS) or the Nigeria Revenue Service (NRS).
7. Arrange Immigration – Secure Expatriate Quota approvals and residence permits (CERPAC) where applicable.
8. Open a Corporate Bank Account – Most banks require CAC documents, TIN, and proof of address.
9. Obtain Sector-Specific Licences – Depending on your industry (e.g., oil & gas, fintech, telecoms, healthcare).
10. Comply Annually – Renew NIPC registration, file tax returns, and maintain statutory compliance.

Frequently Asked Questions

Conclusion

Foreign participation in Nigerian business is more accessible than ever. Still the 2025 regulatory changes, particularly the transition from Pioneer Status to the new EDTI scheme and mandatory NIPC annual renewals, require careful navigation. Understanding CAMA 2020, recent amendments, and the evolving tax landscape is crucial for successful investments.

The opportunity is significant, but so is the complexity. Professional guidance ensures compliance and maximizes your investment benefits.

This article is provided for information purposes only and does not constitute legal advice. For more information or to seek further advice on the contents of this article, we invite you to contact us. We will be delighted to provide additional details and guidance. For further enquiries, kindly send us a message.

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