INDUSTRIAL SECTOR
Import duty rebate
A 25% import duty rebate was introduced in 1995 to ameliorate the adverse effect of inflation and to ensure increase in capacity utilization in the manufacturing sector. Investors are however, advised to ascertain the current operative figures at the time of making an investment, because these concessions have undergone some amendments in the past few years.
Re-Investment Allowance
This incentive is given to manufacturing companies that incur capital expenditure for purposes of approved expansion of production capacity; modernization of production facilities; diversification into related products. It is aimed at encouraging reinvestment of profits.
Investment Tax Allowance
Under this scheme, a company would enjoy generous tax allowance in respect of qualifying capital expenditure incurred within five years from the date of the approval of the project.
Dividends derived from manufacturing companies in Petro-chemical and liquefied natural gas sub-sector is exempt from tax.
Companies with turnover of less than n1 million are taxed at a low rate of 20% for the first five years of operation if they are into manufacturing.
Dividend from companies in manufacturing sector with turnover of less than n100 million is tax-free for the first five years of their operation.
Investment Guarantees/Effective Protection
Transferability of funds section 24 of NIPC decree provides that a foreign investor in an enterprise shall be guaranteed unconditional transferability of funds through an authorized dealer in freely convertible currency of:
· Dividends or profit (net of taxes) attributable to the investment;
· Payments in respect of loan servicing where a foreign loan has been obtained;
· Remittance of proceeds (net of all taxes)and other obligations in the event of a sale or liquidation of the enterprise or
· Any interest attributable to the investment.
Guarantees Against Expropriation
By the provision of section 25 of the same NIPC decree, no enterprise shall be nationalized or expropriated by any government of the federation, unless the acquisition is in the national interest or for public purpose; and no person who owns either wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other person.
These can only be done under a law that makes provision for:
· Payments of fair and adequate compensation; and
· Right of access to the courts for the determination of the investor's interest or right and the amount of compensation to which he is entitled.
In addition to all these safeguards, the Nigerian government is prepared to enter into investment protection agreement with foreign enterprises wishing to invest in Nigeria.
Access to Land
Any company incorporated in Nigeria is allowed to have access to land rights for the purpose of its activity in any state in the country. It is, however, a requirement that industrial companies comply with regulations on use of land for industrial purposes and with environmental regulations. Land lease is usually for a term of 99 years unless the company stipulates a shorter duration.
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