Operating a Representative Office in Nigeria has been saved
Operating a Representative Office in Nigeria
Any real advantage?
The choice of an optimal entry vehicle into a new market or economy is one of the perennial concerns of investors. Depending on the investment drivers and the stage of the evolution of the target market or economy, direct presence or indirect presence options may be evaluated and adopted. The direct presence options maybe full or limited. One of the limited direct presence options is the use of Representative Office (RO).
It is trite that a branch is not a permitted legal vehicle to carry on business under Nigerian law. It is also trite that a foreign company seeking or intending to carry on business in Nigeria is required to incorporate a local subsidiary under the companies legislation. It has thus been a concept that some investors have struggled with when they are advised to operate an RO in Nigeria, they will need to comply with the requirement of the companies legislation under the provisions of section 54. In effect, the operation of an RO is a matter of function to be ascribed to the subsidiary and not of legal structure under Nigerian law.
The typical functions that may be assigned to the RO without creating a tax consequence for the non-resident investor are:
- Storage or display of goods or merchandise
- Collection of information including analysis
- Market intelligence including leads on business opportunities
- Provision of local logistics ancillary for the foregoing