Like in any other country, there are laws that govern business in Nigeria. These laws are important to businesses and their dealings with individuals, government organizations, and other businesses.
These laws serve as a guide for maintaining order, safeguarding rights, setting standards and settling disputes. As an entrepreneur, it is important to know these laws.
Below are five laws that affect business in Nigeria.
Companies and Related Matters Act (CAMA)
The Companies and Related Matters Act (CAMA) is one of the laws that enhances and supports Micro, Small and Medium Enterprises (MSMEs). The Act provides a legal basis for how MSMEs are to operate in Nigeria. The objective of the CAMA Act is to improve the quality and efficiency of regulation in the legislation, thereby enabling efficient ease of doing business for Nigerian MSMEs in particular.
Value Added Tax (VAT) Act
It is a tax levied on the delivery of goods and services. It is the responsibility of the customers and not of the business owner. The tax is calculated at a rate of 7.5% of the value of taxable goods and services in Nigeria. The VAT governs all kinds of businesses in Nigeria.
Nigerian Investment Promotion Commission (NIPC) Act
The Nigerian Investment Promotion Commission Act is an act which encourages and promotes investment in the Nigerian economy and deals with related matters. Before starting a business, foreign-invested companies must register with the NIPC. The documents obtained during registration with the Corporate Affairs Commission are mainly necessary for this purpose.
A foreign investor who registers with the NIPC is also entitled to a number of benefits, including the ability to return all proceeds in the event of a transfer or liquidation. This act is necessary if you have a foreign investor or business partner.
Corporation Income Tax Act (IRS)
The Corporation Income Tax Act (CITA) is the main law governing how businesses are taxed in Nigeria. The Nigerian tax system is tiered, which simply means that all three levels of government are responsible for collecting taxes. Your “taxable business income” is multiplied by the predetermined “tax rate” to determine your corporation tax.
The tax rate is 30% of all profits of a company. Certain income, such as that of cooperative societies, is exempt from corporate tax if it does not result from commercial activity. All businesses are required to pay the provisional tax, equal to the tax paid the previous assessment year, no later than three (3) months after the start of each assessment year. CIT regulates businesses registered in Nigeria that generate legitimate income.
The Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act (FLSA) specifies guidelines for minimum wage, overtime pay, documentation, and employment rates for workers. This law guarantees fair treatment of workers. This law governs businesses with employees. So if you have employees for your business, this law protects their rights.
It is essential to know these laws as a business owner in Nigeria. This way, you will know how to regulate your business. Violation of these laws will result in penalties which may adversely affect your business. Finally, knowledge of these laws is crucial for the proper functioning of a business. If you don’t understand these laws, you may not know your rights as a business owner.
