1: INVESTMENT POLICIES AND PROTECTIONS
1.1: Nigerian Investment Promotion Commission Act
Sections 17 & 18 NIPC Act liberalise ownership of investment by any national in any enterprise except enterprises with activities listed on the 'negative list' which are prohibited for both foreign and Nigerian investors.
The 'negative list' includes:
- production of arms, ammunition, etc;
- production of and dealing in narcotic drugs and psychotropic substances;
- production of military and para-military wears and accoutrement, including those of the Police and the Customs, Immigration and Prison Services; and
- such other items as the Federal Executive Council may, from time to time, determine.
Section 22 NIPC Act empowers the NIPC to negotiate, in consultation with appropriate Government agencies, special incentives for strategic or major investments.
Free transferability of capital and returns
Section 24 NIPC Act provides that a foreign investor in an enterprise, to which the Act applies, shall be guaranteed unconditional transferability of funds through an authorized dealer in a freely convertible currency, of:
- dividends or profits (net of taxes) attributable to the investment;
- payments in respect of loan servicing where a foreign loan has been obtained; and
- the remittances of proceeds (net of all taxes), and other obligations in the case of sale or liquidation of the enterprise or any interest attributable to the investment.
Protection against nationalisation and expropriation
Section 25 NIPC Act provides guarantees to investors against nationalisation and expropriation. Where an acquisition is made in national interest or for public purpose, the investor shall be entitled to:
- payment of fair and adequate compensation;
- a right of access to courts for the determination of the investor's interest or amount of compensation to which the investor is entitled; and
- payment of compensation without undue delay, and authorisation for its repatriation in convertible currency, where applicable.
Recourse to international arbitration
Section 26 NIPC Act grants a foreign investor the option of recourse to international arbitration machinery for the settlement of disputes. Where there is disagreement on the method of dispute settlement to be adopted, the International Centre for Settlement of Investment Disputes Rules shall apply.
1.2: BILATERAL INVESTMENT TREATIES
The agreements make provisions for the elimination of double taxation with respect to taxes on income and capital gains. Section 41 CGTA provides that any arrangement set out in an order made under Section 38 PITA and Section 45 CITA so far as they provide (in whatever terms) for relief from tax chargeable in Nigeria on capital gains by virtue of this section, have effect in relation to CGT.
Partners: Belgium, Canada, China, Czech, France, Italy (Airline & Shipping only), Pakistan, Philippines, Romania, Slovak, South Africa, The Netherlands, United Kingdom.
An IPPA seeks reciprocal promotion and protection of investments by individuals and companies in the territories of participating States. An IPPA provides the baseline minimum protections for foreign investments.
Partners: China, Finland, France, Germany, Italy, Korea Republic, Netherlands, Romania, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan Province of China, United Kingdom.
ECOWAS Treaty is a multilateral agreement executed by 15 countries in West Africa to enhance and accelerate economic and social development in the region. Further to the Treaty, ECOWAS set up ETLS as an ope rational tool to promote and facilitate trade within the region.
This Scheme provides for:
- abolition of customs duties levied on imports and exports of goods produced and moving among member states; and
- abolition of non-tariff barriers among members states to facilitate free movement of goods and services across member states.
Partners: Benin, Burkina Faso, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo
Nigeria is a member of the Commonwealth, and, as part of its independent policy to foster the relationship among other commonwealth nations, Nigeria provides in Section 44 CITA a tax relief for profits earned in Commonwealth countries which are also liable to tax in Nigeria.
Nigerian companies shall be subject to the Commonwealth tax rate, subject to a cap of half of the Nigerian tax rate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.