Investment Incentives
TRADE INCENTIVES & TAX
In creating a conducive business environment, the Lagos State government has put in place a wide range of fiscal incentives. Some of the main incentives are import concessions, tax exemption for exported products and tax reductions for qualifying companies
Lagos State has a robust tax system coupled with favourable trade incentives
30%
Companies Income Tax (CIT)
2%
Education Tax (ET)
10%
Withholding Tax (WHT)
5%
Value Added Tax (VAT)
10%
Capital Gains Tax (CGT)
1%
Information Technology Tax
IT Taxes are paid by companies with turnover of above $500,000
All companies are to pay taxes to the Federal Inland Revenue Service
TRADE INCENTIVES & TAX
Companies that take advantage of the incentives will be able to set up proper structures
Sector
Trade Incentives
Tax
Regulatory Bodies
Housing
Sector: Housing
Trade Incentives
Lagos State is willing to offer these incentives to encourage investment in the housing sector
Subsidizing statutory fees for PPP participants
Fast-tracking the issuance of land titles, to enable investors obtain funding quicker
Tax related incentives also include:
Zero tax on rental income during pioneer period
Pioneer status incentive when certain requirements are met.
Capital gains from property disposed within 3-5 years is not subject to tax
Tax
CGT-10% WHT-10% Stamp duties – 2% Property levy – Residential – 0.5% – Malls-1.25% – lndustrial-0.5%
Regulatory Bodies
Federal Ministry of Lands, Housing and Urban Development
Federal Housing Authority
Lagos State Real Estate Transaction Department
Real estate Developers Association of Nigeria
Nigerian Institute of Estate Surveyors and Valuers
Retail
Sector: Retail
Trade Incentives
Tax related incentives also include:
Exemption from capital gains tax on disposal of assets Zero VAT on basic food items
Tax
CIT- 30% ET-2% WHT-10%
Regulatory Bodies
Standard Organisation of Nigeria
National Agency for Food and Drug Administration and Control
ICT
Sector: ICT
Trade Incentives
Tax related incentives also include:
50% reduction in WHT on dividends payable to an investor in Venture project company
Capital allowance of 100% spread over 5 years
Zero capital gains tax on capital disposal within 5 years
Tax
CIT- 30% ET-2% Custom duties – 5%-75%
Regulatory Bodies
National Information Technology Development Agency
National Electronic Commerce Council
Power
Sector: Power
Trade Incentives
There is up – front funding in form of capital subsidies to cover part of the initial capital cost by the Nigeria Gap Fund for PPP
Tax incentives also include:
Zero duty on purchase of power generation equipment
20% capital allowance for 5 years
Tax holiday of 5-7 years granted to companies that manufacture transformers, meters, control panels, switch gears, cable and other electrical related equipment.
Tax
CIT – 30% ET-2% WHT-10%
Regulatory Bodies
Nigerian Electricity Regulatory Commission
Federal Ministry of Power
Lagos State Electricity Board
Transportation
Sector: Transportation
Trade Incentives
Lagos State government is willing to enter into a PPP arrangement in the operation of water transportation
Tax related incentives also includes:
Initial capital allowance of 30% on purchase of vehicles
Restriction of tax charged for shipping and airline companies to activities carried out in Nigeria
Tax holiday of 5- 7 years for ship building, maintenance of vessels, manufacturing and maintenance of aircraft
Exemption from VAT for commercial vehicles and spare parts purchased
Tax
CIT- 30% ET- 2% WHT-10%
Regulatory Bodies
Lagos Metropolitan Transportation Authority
National Union of Road Transport Workers
Health
Sector: Health
Trade Incentives
Companies involved in the formulation and manufacture of pharmaceuticals qualifies for pioneer status incentive.
Tax related incentive includes:
Tax holiday of 3-5 years
Tax
CIT- 30% ET- 2% WHT-10%
Regulatory Bodies
National Agency for Food and Drug Administration and Control
National Health insurance Scheme
Nigerian Medical Association
Lagos State Ministry of Health
Tourism
Sector: Tourism
Trade Incentives
Tax related incentive includes:
25% of income derived from tourism by hotels in convertible currencies will be exempted from tax
Tax holiday of 3 -5 years
Import duty exemption on tourism related equipment
Provision of land for tourism development at concessional rates
Availability of soft loans with long period of moratorium
Tax
CIT – 30% ET – 2% WHT – 10%
Regulatory Bodies
National Film& Video Censors Board
Nigerian Copyright Commission
Nigerian Broadcasting Corporation
Lagos State Ministry of Tourism and Inter- Governmental Relations
Environment
Sector: Environment
Trade Incentives
Tax related incentive includes:
Rent free land at construction stage in free zone areas
Repatriation of foreign capital investment with capital appreciation on investment
Import duty-free raw materials input
Tax
CIT- 30% ET- 2% WHT-10%
Regulatory Bodies
Lagos State Waste
Management Authority
Lagos State Environmental
Protection Agency
OTHER GENERAL INCENTIVES
As part of the efforts to provide an enabling environment
the government has passed aggressive incentives for investors to benefit
Lekki Free Trade Zone (LFTZ)
The State Government has obtained approval from NEPZA for the development of the free trade zone. A minimum investment of $500,000 is required by approved enterprises to operate in the free trade zone.
Pioneer Status
Five-year tax holiday in respect of industries located in economically disadvantaged local government area of the Federation
Research & Development Incentive
Up to 10% of profits set aside as reserve for Research and Development qualify as allowable expenses
Up to 120% of expenses on Research and Development are tax deductible provided that such research and development activities are carried out in Nigeria and are connected to the business from which income or profit is derived
Labour Intensive Mode of Production
Industries with high labour/capital ratio are entitled to tax concessions.
100 persons-6% tax concession
200 persons – 7 % tax
concession 1,000 persons or more – 15% tax concession
SME Incentives
SMEs have a 10% reduction in tax rate to be paid in the first 5 years of commencing business
Dividends from small manufacturing companies are exempted from tax for the first 5 years of business operations.