I was doing some research on Investment laws in Nigeria only for me to bump in on a certain VENTURE CAPITAL (INCENTIVES) DECREE NO. 89 1993 ACT CAP. V2 L.F.N. 2004. I thought it was rather fascinating considering the array of incentives the law came with. See some;
Qualifying venture incentives.
The following incentives shall accrue to venture investments –
(a) an equity investment by a venture capital company in a venture project company shall, for purposes of capital allowance under the Companies Income Tax Act, be treated as follows –
(i) the first year deduct 30 per cent,
(ii) for the second year deduct 30 per cent,
(iii) for the third year deduct 20 per cent,
(iv) for the forth year deduct 10 per cent,
(v) for the fifth year deduct 10 per cent;
(b) any equity investment in the Risk Fund by an individual or a body corporate shall for purposes of capital allowance under the Companies Income Tax Act be accorded the same incentives as specified in paragraph (a) of this subsection;
(c) the amount of capital gains accruing to a venture capital company from a disposal of its equity interest in a venture project company shall be exempted from capital gains tax as follows –
(i) for the disposal of capital within 5 years of investment 100 per cent,
(ii) for the disposal of capital between 6 and 10 years of investment 75 per cent,
(iii) for the disposal of capital between 11 and 15 years of investment 25 per cent,
(iv) for the disposal of capital after 15 years of investment ……. 0 per cent,
(d) the withholding tax payable on dividend declared by the Risk Fund in a venture project company shall be reduced by 50 per cent of the prevailing rate of withholding tax in respect of dividend received by a participant in the Risk Fund and venture project company within the first five years;
(e) the provisions of the Industrial Development (Income Tax Relief) Act, shall apply to a venture project company; and
(f) the provisions of the Export (Incentives and Miscellaneous Provisions) Act shall apply to a venture project company to the extent of the involvement of the venture project company in the exportation of its products.
These are wonderful incentives and I wondered if they still existed. Current inquiries did not confirm if the Law still existed or if it was repealed with the Investment and Security Act of 1999. I will update this blogpost anytime I verify the legality of this Act. For now see the link to the Act below;
VENTURE CAPITAL (INCENTIVES) DECREE NO. 89 1993 ACT CAP. V2 L.F.N. 2004
