Nigeria: Tax incentives for startup companies

Nigeria Startup Act, 2022

Nigeria Startup Act, 2022

The president on 19 October 2022 signed the Nigeria Startup Act, 2022 into law following passage by the National Assembly. The law provides the legal and institutional framework for the development and operation of startups in Nigeria.

The law is divided into 10 parts, which address four key areas that technology entrepreneurs contend with: capital, regulations, infrastructure, and talent.

In addition, the law introduces specific provisions aimed at reforming identified legal, regulatory, tax, and administrative bottlenecks that have hindered the operations of startups in Nigeria.

The law also provides certain tax incentives:

  • “Pioneer status incentive”: Labelled startups operating in eligible industries under the pioneer status incentives scheme may apply for tax reliefs and incentives. If granted, this would allow a tax holiday for an initial period of three years, which may be extended for an additional two years.
  • Exemption from contribution to “industrial training fund”: Labelled startups would be exempt from contributions to the industrial training fund for in-house training provided to their employees for the duration of the startup label.
  • Investors: Angel investors, accelerators, and venture capitalists are entitled to an investment tax credit equivalent to 30% of their investment in a startup. The law also exempts angel investors, venture capitalists, private equity fund, accelerators or incubators from capital gains tax when they dispose their investment in a labelled startup provided that the assets have been held for a minimum of 24 months.

Read an October 2022 report [PDF 2.35 MB] prepared by the KPMG member firm in Nigeria


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