VENTURE CAPITAL (INCENTIVES) ACT

An Act provides tax incentives and other benefits to encourage investments in venture capital funds that support early-stage companies in Nigeria's technology and innovation sectors. It targets investors, fund managers, startups, and the revenue service for administering these incentives. This stimulates entrepreneurship, job creation, and technological development.

What Is This Policy?

An Act providing tax and other incentives to encourage investment in venture capital funds that finance early-stage and growth companies in Nigeria, particularly in technology and innovation sectors.

Who Does It Target?

Venture capital fund managers and investors Startups and early-stage companies seeking venture funding FIRS administering tax incentives Technology and innovation ecosystem participants

What Does It Aim to Achieve?

Stimulate the supply of venture capital to innovative Nigerian businesses by providing tax relief to qualifying investors, thereby promoting entrepreneurship, job creation, and technology development.

Key Features

Tax Relief: Investors in approved venture capital funds enjoy prescribed tax reliefs on their investments. Capital Gains Exemption: Qualifying gains on disposal of venture capital investments may be exempt from capital gains tax. Approved Fund Criteria: Venture capital funds must meet defined criteria to qualify for the incentive scheme. FIRS Administration: FIRS administers the incentive scheme and issues approvals for qualifying funds.

Current Status

Rollout Stage: Active Coverage: Nationwide venture capital and startup ecosystem Beneficiaries: Venture capital investors; startups; innovation economy Funding: Revenue concession

How to Access

Venture capital funds must apply to FIRS for approved fund status Fund managers must comply with reporting requirements Investors must hold investments for minimum qualifying period to access incentives Application method: Apply for fund approval with FIRS at https://www.firs.gov.ng

Important Terms

Incentives are conditional on compliance with approved fund terms Early disposal of qualifying investments before minimum holding period forfeits tax relief Fund must be registered with SEC as a collective investment scheme

Official Resources

Website: https://www.firs.gov.ng Contact: Federal Inland Revenue Service (FIRS) / SEC Nigeria

Legal Framework

Enacted under Section 4 of the 1999 Constitution. Operates alongside the Investment and Securities Act 2007, the Companies Income Tax Act 2004, the Personal Income Tax Act, the Nigerian Investment Promotion Commission Act 1995, and international venture capital standards including EVCA (European Venture Capital Association) guidelines as comparative frameworks.