NOV 2022 NEWS Aluko & Oyebode
DID YOU KNOW?
The Nigeria Startup Act 2022 (the “Act“) has provisions aimed at incentivising the establishment of innovative startups in Nigeria. The Act also introduces incentives targeted at stakeholders such as angel investors, venture capitalists, private equity funds, accelerators, or incubators involved in the startup ecosystem. Some of such incentives are outlined in this post.
- Investment Tax Credit: Tax credit equivalent to 30% of an investment in a labelled startup may be applied to offset any tax payable on the investment return.
- Exemption of Capital Gains Tax: Gains made from the disposal of labelled startup assets that have been held in Nigeria by an angel investor (or other eligible investor) for at least 24 months are exempt from capital gains tax.
- Repatriation of Investment Proceeds: The Act reiterates that foreign investors would be able to repatriate proceeds of their investments in labelled startups in freely convertible currency. Repatriation shall be at the Central Bank of Nigeria’s official exchange rate and subject to presentation of a Certificate of Capital Importation.
- Applicability of Incentives under the Nigeria Export Processing Zones Act: The Act extends existing incentives under the Nigeria Export Processing Zones Act 1992 (“NEPZA Act“) to any accelerator or incubator carrying out an approved activity in a technology development zone. Such zones are to be established in collaboration with the Nigerian Export Processing Zones Authority. Consequently, accelerators or incubators operating from a technology development zone would be exempt from all federal, state, and local government taxes, levies, and rates in line with the NEPZA Act.
Read our previous article on the Nigeria Startup Act 2022 here.