Essential Legal Requirements Every Nigerian Business Owner Should Know

Running a business in Nigeria means you have to follow certain rules and regulations set by the government. These laws help ensure that businesses operate fairly and transparently. To stay on the right side of the law, here are some key requirements every business owner needs to know:

Tax Clearance Certificate: This certificate is essential to prove that your business has paid its taxes. For example, if you're a vendor providing services to large companies, they will ask for this certificate before they finalize any contracts with you. You can get it after submitting your company’s audited financial statements and paying any due taxes.
VAT and WHT Payments: VAT (Value Added Tax) and WHT (Withholding Tax) are taxes that your business collects on behalf of the government. These taxes must be paid monthly. If you don’t pay on time, you might face heavy penalties. For instance, if you collect VAT from your customers but fail to remit it to the government, you could be fined.
Employee Deductions: As an employer, you need to deduct certain amounts from your employees’ salaries, such as pension contributions, National Housing Fund (NHF), and Pay As You Earn (PAYE) tax. These deductions must be sent to the appropriate government bodies. Failing to do so can result in fines.
Annual Returns: Every year, your business must file an Annual Return with the Corporate Affairs Commission (CAC). This includes details like your company’s audited accounts, shareholder information, and any loans or debentures. This must be done within 42 days after your Annual General Meeting (AGM).
Employee Compensation: Employers must contribute to the Employee Compensation Fund, which is managed by the Nigerian Social Insurance Trust Fund (NSITF). This fund provides insurance for workers in case of injury at work. The contribution is usually 1% of your company’s monthly payroll.
Industrial Training Fund (ITF): Your business is required to contribute 1% of your payroll to the ITF, which helps fund employee training programs. At the end of the year, if you can prove that you’ve trained your staff, you can get back about 50% of this contribution.
Signage and Billboard Approvals (LASSA): If your business is in Lagos and you want to put up a sign, billboard, or even just your company name on your building, you need approval from the Lagos State Signage Agency (LASSA). Other states have similar requirements. You’ll need to pay a fee and follow specific design rules.
Local Government Permits and Levies: Local governments require businesses to pay for various permits, like waste disposal, environmental permits, and TV licenses. If you don’t pay, they might threaten to shut down your business.
SON Approvals: The Standards Organization of Nigeria (SON) requires businesses to register their products to ensure they meet safety and quality standards. This is particularly important for manufacturers and importers.
Financial Crime Prevention: If your business deals with large amounts of money, like a bank or a hotel, you must report certain transactions to the government to prevent money laundering. This includes submitting reports to the EFCC and the Central Bank of Nigeria (CBN).
SCUML Certificate: Certain businesses, like real estate or law firms, need to register with the Special Control Unit Against Money Laundering (SCUML) to prevent money laundering. This registration also allows the EFCC to monitor your financial activities.
Financial Reporting Council (FRC): Every company in Nigeria must register with the FRC, which oversees how financial reports are prepared. If your business uses consultants, they also need to be registered with the FRC.
Nigeria Data Protection Commission (NDPC) Registration: If your business handles the personal data of more than 2,000 people annually, you must register with the NDPC and submit a yearly Compliance Audit Report. Failure to do so can result in fines.
Business Permits: If your business is owned by foreigners, you need a Business Permit from the Federal Ministry of Interior. This permit is only given to companies with a minimum capital of N100 million.
NOTAP Registration: If your business is working with a foreign company on a technology agreement, you need to register with the National Office for Technology Acquisition and Promotion (NOTAP) to access foreign exchange at the official rate.