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Business News of Saturday, 20 August 2022

Source: www.nairametrics.com

Five laws every business person must know in Nigeria

Business Business

Just like in any other country, there are laws that govern businesses in Nigeria. These laws are important when it comes to businesses and their dealings with people, governmental organisations, and other businesses.

These laws act as a guide to uphold order, safeguard rights, establish standards, and settle conflicts. As an entrepreneur, it is important to know these laws.

Below are five laws that affect businesses in Nigeria.

Companies and Allied Matters Act (CAMA)

The Companies and Allied Matters Act (CAMA) is one of the laws that improves and supports Micro, Small, and Medium Scale Enterprises (MSMEs). The Act offers a legal foundation for how MSMEs should operate in Nigeria. The goal of the CAMA Act is to enhance regulatory quality and effectiveness in legislation, thereby enabling effective ease of doing business for Nigerian MSMEs in particular.

Value Added Tax (VAT) Act

This is a tax charged on the delivery of goods and services. It is payable by the customers and not the business owner. The tax is calculated at a rate of 7.5% of the value of the taxable products and services in Nigeria. VAT governs all kinds of businesses in Nigeria.

Nigerian Investment Promotion Commission (NIPC) Act

The Nigerian Investment Promotion Commission Act is a law encouraging and promoting investment in the Nigerian economy, and dealing with related issues. Before starting a business, companies with foreign equity must register with the NIPC. Documents obtained at registration with the Corporate Affairs Commission are primarily needed for this.

A foreign investor that registers with the NIPC is also entitled to a number of benefits, including the ability to remit all proceeds in the case of a transfer or liquidation. This act is necessary if you have a foreign investor or business partner.

Companies Income Tax (CIT) Act

The Companies Income Tax Act (CITA) is the primary law governing how businesses are taxed in Nigeria. Nigeria’s tax system is a multi-level one, which simply means that the three levels of government are in charge of collecting taxes. Your “taxable business income” is multiplied by the predetermined “tax rate” to determine your company tax.

The tax rate is 30% of a company’s whole profit. Some revenues, such as those from cooperative societies, are free from CIT if they are not a result of the business activity. Every business is required to pay provisional tax, which is equal to the tax paid in the preceding year of evaluation, no later than three (3) months after the start of each year of evaluation. CIT governs registered businesses in Nigeria which earn legitimate revenue.

The Fair Labour Standards Act (FLSA)

The Fair Labour Standards Act (FLSA) specifies guidelines for minimum wage, overtime compensation, documentation, and employment rates that are applicable to workers. This law ensures that there is fair treatment of workers. This act 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. That way, you will know how to regulate your business. Violation of these laws will incur penalties that may negatively affect your business. Finally, knowledge of these laws is crucial to the successful running of a business. If you don’t understand these laws, you may not know your rights as a business owner.