Repatriation refers to the process of transferring people, assets, or funds back to their country of origin. In financial terms, it involves converting foreign-earned income, investments, or profits into the investor’s home currency. Businesses, individuals, and multinational corporations frequently engage in repatriation when they return capital from foreign subsidiaries, investments, or overseas income to their domestic accounts.

For foreign investors in Nigeria, free repatriation of funds is crucial. This guide provides an in-depth analysis of the legal framework and procedural requirements of repatriating funds from Nigeria.

Legal Framework for Repatriation of Funds in Nigeria

The Nigerian government has established some laws and regulations to regulate foreign investments and ease repatriation of funds by investors. The most significant legal provisions are:

1. Foreign Exchange (Monitoring and Miscellaneous Provisions) Act

The act governs foreign exchange transactions in Nigeria. It provides the legal cover for foreign investors to repatriate capital, dividends, and profits abroad following compliance with drawn guidelines.

2. Nigerian Investment Promotion Commission (NIPC) Act

The NIPC Act protects and promotes foreign investment in Nigeria. It guarantees the right of investors to repatriate profits, dividends, and capital, to create confidence in the Nigerian investment environment.

3. Central Bank of Nigeria (CBN) Regulations

As the financial regulator of Nigeria, the CBN oversees foreign exchange transactions and repatriation processes. It issues the guidelines banks must follow when they process foreign currency remittances to comply with monetary policy and foreign exchange rules.

Steps in Repatriating Funds from Nigeria

Foreign investors are required to follow some procedures to make the repatriation process smooth. The following is a step-by-step procedure:

Step 1: Obtain a Certificate of Capital Importation (CCI)

A Certificate of Capital Importation (CCI) is a legal document issued by a commercial bank (authorized dealer) in the Central Bank of Nigeria’s name. It is formal proof that foreign capital has been imported into Nigeria under the law for the purpose of investment.

Requirements for Issuance of a CCI:

1. Capital Inflow: The capital must be brought into Nigeria in the form of cash, equity, loan, or imported goods (such as machinery or raw materials).
2. Authorized Dealer: A Nigerian commercial bank can issue a CCI only within 24 hours of receiving the capital.
3. Required Documents:
4. Application Letter: Official application for the issuance of a CCI.
5. Board Resolution: An investment resolution.
6. Certificate of Incorporation: Document to prove that the company is incorporated in Nigeria.
7. Evidence of Capital Importation: This may be in the form of bank statements, transfer receipts, or SWIFT messages.
8. Filing with the CBN: The responsible bank is to file a report with the CBN within 48 hours of the release of the CCI.

Electronic CCI (e-CCI):

The Central Bank of Nigeria has also implemented electronic CCIs (e-CCI) to enhance efficiency in the process. The e-CCI is processed via an online platform, which reduces the risk of loss of documents and speeds up repatriation.

Step 2: Initiating the Repatriation Process

Once an investor has a CCI, they can repatriate their funds through the following process:

1. Tax Compliance:

• Investors must pay all taxes due, including withholding tax on dividends (10% for ordinary investors and 7.5% for treaty country investors).
• A Tax Clearance Certificate (TCC) is generally required before repatriation.

2. Submit Repatriation Request:

• Investors must visit their authorized dealer (commercial bank) with the CCI and supporting documents to get the funds transferred.

3. Currency Conversion & Transfer

• Ttc can be converted to any widely traded foreign currency.
• CBN ensures that there are no impediments in the repatriation of profits, rent, royalties, interest, or dividends provided the investment was covered with a CCI.

What Can Be Repatriated?

• Profits, royalties, dividends, and rent (after deducting tax).
• Repayment of loans and repayment of interest (after tax clearance).
• Liquidation or sale proceeds of an investment.

Note: There is no limit to the amount of profit that can be repatriated as dividends, provided the company remains solvent at the time of payment.

Alternate Repatriation Option: Technology Transfer Agreements (TTA)

The alternative method of repatriation is Technology Transfer Agreements (TTA). Under a TTA, foreign investors can be remunerated for technology transfer, trademarks, technical know-how, or engineering services to a Nigerian company.

Step 1: Register the TTA with NOTAP

All TTAs must be registered with the National Office for Technology Acquisition and Promotion (NOTAP) before repatriation.

Major Requirements for Registering a TTA under NOTAP:

• The agreement should stipulate use of trademarks, patented inventions, provision of technical expertise, supply of equipment, or training of personnel.
• The TTA should specify the degree of technology transfer, the duration, and rights of the Nigerian party.
• Provisions for financing capacity building, technology domestication, and indigenous skills development must be made.
• Deduction of the applicable local tax.

Step 2: Submit Required Documents

The following documents are required to be submitted for registration of a TTA with NOTAP:

• Completed Application Form, NOTAP Questionnaire, and TAA Pre-Qualification Form.
• Draft Copy of the Technology Transfer Agreement.
• Company Memorandum and Articles of Association.
• Certificate of Incorporation.
• Annual Report and Tax Clearance Certificate.
• Engineering Drawings, Feasibility Study Reports (where applicable).
• Approvals by Relevant Authorities.
• Transferor/Licensor’s Business Profile.

Upon registration of the TTA and payment of all taxes, the foreign investor can repatriate funds through the authorized dealer who provided the CCI for initial investment.

Conclusion

Repatriation of funds in Nigeria is a process that is governed and systematic with the aim of protecting foreign investors as well as ensuring regulatory compliance. Some of the key points are as follows:

• Repatriation of profits and capital is required by a CCI.
• Adherence to taxes is crucial—investors must remit all applicable taxes before the fund transfer.
• Foreign investors can use TTAs to repatriate technology, trademark, or intellectual property-related funds.
• Nigeria’s legal framework supports foreign investment with the free transfer of capital out of the country.

By being aware of these procedures and adhering to the regulatory system, foreign investors are able to repatriate their funds from Nigeria without hesitation without encountering legal or financial hindrances.