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
Young, A. G. (1995) “The tyranny of number confronting the Statistical realities”. Quarterly Journal
of economics. Vol. 101 p 641-680.
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