The Nigerian Senate passed the Nigerian Startups Bill on July 20, 2022, and this was signed into Law by President Mohammadu Buhari on Wednesday 19 October 2022.
Some of the Highlights of the Startup Act and Tax Incentives are as follows:
1. The Act stipulates that, among other things, a company must be a registered limited liability company that has been in operation for no longer than 10 years from the date of formation in order to be entitled to the name startup.
2. Startups have access to a unique startup fund established under the Act. The Startup Investment Seed Fund established by the Act is only intended for startups.
3. According to the provisions of the Industrial Development (Income Tax Relief) Act, a labelled startup may be entitled to exemption from paying income tax or any other tax chargeable on its income or revenue for a period of three years, and an additional two years if still within the period of a labelled startup, provided that the tax relief begins on the date of the issuance of the startup label.
4 Non-resident corporations that provide technical, consulting, professional, or management services to a designated startup are liable to a 5% withholding tax on income resulting from such services, provided that payment of the withholding tax is the last tax to be paid by such non-resident companies.
5. Gains arising from the disposal of assets by an angel investor, venture capitalist, private equity fund, accelerators, or incubators in relation to a designated startup are exempt from capital gains tax if the assets have been held in Nigeria for a minimum of 24 months. etc
6. The Act’s main goal is to establish Nigeria as an important tech hub in Africa. This is why it aims to improve the ease of doing business in the Nigerian tech sector and encourage domestic and international investment in the startup ecosystem for technology. etc