An offshore company for Nigerians is a company registered outside Nigeria, in a country such as the United States, the United Kingdom, the United Arab Emirates or Mauritius, and owned by Nigerian founders, families or businesses. Used properly, an offshore company can help a business raise international investment, trade and get paid in foreign currency, hold international assets and expand into other markets. Used carelessly, it can create tax, foreign exchange and banking problems in Nigeria and abroad.
This guide explains who needs an offshore company and why, the jurisdictions Nigerians commonly use, how to set one up step by step, what it costs to run, and the Nigerian rules that continue to apply once you have one.
What is an offshore company?
An offshore company is simply a company incorporated in a country other than the one where its owners live. It is a separate legal person under the laws of the country where it is registered, with its own directors, shareholders, bank accounts and filing obligations. "Offshore" does not mean secret or tax free. Most jurisdictions now keep registers of beneficial owners, exchange tax information with other countries and expect companies to have real substance.
For Nigerians, an offshore company is usually one part of a wider structure. It may sit above a Nigerian operating company as a holding company, operate alongside it to serve foreign customers, or hold investments abroad. See our guide to corporate structures in Nigeria for how these structures fit together.
Who needs an offshore company?
An offshore company is worth considering if you are:
- A startup raising international venture capital: many US and international investors and accelerators prefer to invest in a Delaware or other foreign holding company, through a structure often called a Delaware flip
- A business with foreign customers: technology, consulting, creative and outsourcing businesses that invoice clients abroad and want to be paid in foreign currency
- An exporter or trader: businesses buying or selling goods internationally that need a foreign trading entity, bank account or presence in a key market
- Expanding into other countries: Nigerian companies opening subsidiaries in other African markets, the UK, the US or the Middle East
- A family with international assets: families holding property, investments or businesses abroad, often as part of succession planning
- An investor or fund manager: those pooling investments from international investors into Nigerian or African companies
An offshore company is usually not needed by a business that only operates in Nigeria, serves Nigerian customers and raises money locally. In that case it adds cost and complexity without a clear benefit.
Why Nigerians set up offshore companies
- Access to international investors, who are familiar with the legal system, company law and exit routes in jurisdictions such as Delaware and England
- Payments and banking: access to foreign currency accounts and international payment platforms that may not be available to Nigerian companies
- Credibility with foreign clients and partners, particularly in procurement and large contracts
- Regional expansion: a single holding company that owns subsidiaries in several countries
- Asset protection and succession: holding international assets in a structure that is easier to manage and pass on
- Legal certainty: established courts and arbitration centres for resolving disputes with international partners
Popular offshore jurisdictions for Nigerians
| Jurisdiction | Commonly used for | Points to consider |
|---|---|---|
| Delaware, United States | Startups raising US venture capital | Investor familiarity, US tax filings, cost of maintaining two entities |
| United Kingdom | Trading, consulting and holding companies | Public register of owners, UK tax and filing obligations |
| United Arab Emirates free zones | Trading, logistics and regional headquarters | Licence costs, visa and office requirements, banking checks |
| Mauritius | African holding companies and investment structures | Substance requirements, treaty network, licensing for some activities |
| British Virgin Islands and Cayman Islands | Holding companies and investment funds | Economic substance rules, investor requirements, banking access |
| Singapore | Asian trading and technology businesses | Local director requirement, strong regulation |
| Rwanda (Kigali International Financial Centre) | African regional holding companies | Newer financial centre, incentives for qualifying companies |
There is no single best jurisdiction. The right choice depends on where your investors, customers, banks and operations are, the activities the company will carry out, the tax treaties and regulatory requirements that apply, and the cost of running the company each year.
How to set up an offshore company: step by step
- Define the purpose: decide what the company will do, who will own it, and how it will relate to any Nigerian company.
- Choose the jurisdiction: compare investor expectations, banking, tax, substance requirements and running costs.
- Appoint a registered agent or local service provider: most jurisdictions require incorporation through a licensed agent who maintains the company's registered office.
- Complete due diligence: provide certified passports, proof of address, CVs, bank references and evidence of the source of funds for each shareholder, director and beneficial owner.
- Reserve the name and incorporate: file the constitutional documents and the details of directors, shareholders and beneficial owners.
- Issue shares and appoint directors: document the share structure, especially where founders, investors or employee share options are involved.
- Open a bank account: often the hardest step for Nigerian owners, because banks apply enhanced checks. A clear business plan, contracts with customers and complete documents help.
- Register for tax and licences: obtain tax identification numbers and any business licences required in the jurisdiction.
- Connect the structure to Nigeria: put in place the share transfers, intercompany agreements and approvals needed between the offshore company and any Nigerian company.
Documents Nigerians usually need
- Certified copies of international passports
- Proof of residential address, such as a recent utility bill or bank statement
- Bank reference letters and, in some cases, professional references
- CVs or business profiles of directors and shareholders
- Evidence of the source of funds and source of wealth
- A business plan or description of the company's activities
- For corporate shareholders, the Nigerian company's CAC documents and board resolution
Bank accounts and payments
Opening a bank account for an offshore company owned by Nigerians can take longer than incorporation. International banks apply enhanced due diligence to many African-owned companies and may ask detailed questions about the business, customers, suppliers and source of funds. Some companies use regulated electronic money and payment institutions as well as, or instead of, traditional banks. Keeping clear records and contracts makes accounts easier to open and keep.
What it costs to run an offshore company
Running costs vary by jurisdiction and include:
- Incorporation fees and the registered agent's fees
- Annual government fees and licence renewals
- Accounting, audit where required, and tax filings
- Economic substance filings, office or director costs where substance is required
- Banking fees and compliance costs
- Legal fees for structuring, share issues and intercompany agreements in Nigeria and abroad
Budget for the annual cost, not just the set-up cost. A company that is not maintained can be fined or struck off, and its bank account closed.
Nigerian rules that still apply
Setting up an offshore company does not take its Nigerian owners outside Nigerian law.
- Tax: Nigerian residents are generally taxed on their worldwide income, and Nigeria's tax laws include rules on the profits of foreign companies controlled by Nigerian residents. Dividends, salaries and fees paid by the offshore company may be taxable in Nigeria. See our tax advisory service.
- Exchange of information: Nigeria takes part in international arrangements for the automatic exchange of financial account information, so foreign bank accounts held by Nigerian residents may be reported to the Nigerian tax authority.
- Foreign exchange: money sent from Nigeria to fund an offshore company, and money brought back into Nigeria, must go through authorised dealer banks in line with CBN foreign exchange rules. Investment into a Nigerian company should be supported by a Certificate of Capital Importation.
- Regulated businesses: where the offshore company will own a Nigerian bank, fintech, insurer or other licensed business, the change of ownership usually needs regulatory approval; see CBN approval for change of control.
- Transfer pricing: transactions between the offshore company and a Nigerian company must be priced at arm's length.
- Public officers: the Constitution prohibits certain public officers from maintaining or operating bank accounts outside Nigeria, which affects offshore structures for politically exposed persons.
Delaware flips for Nigerian startups
A Delaware flip restructures a Nigerian startup so that a Delaware corporation owns the Nigerian operating company, and the founders and investors hold shares in the Delaware company. A flip can make fundraising from US investors easier, but it has costs, and the Nigerian company remains subject to Nigerian corporate, tax and regulatory law. Some startups are now choosing Nigerian or other African holding structures instead. See our startup fundraising service.
Common mistakes
- Setting up an offshore company without a clear purpose, then paying to maintain it for years
- Choosing a jurisdiction that investors, banks or clients do not trust
- Funding the company outside official foreign exchange channels, which makes repatriation and compliance difficult
- Ignoring Nigerian tax on income earned through the offshore company
- Using nominee arrangements that hide the real owners, which banks and regulators treat as a red flag
- Failing to file annual returns, accounts and substance reports in the offshore jurisdiction
How we can help
Our corporate and commercial lawyers in Lagos and Abuja help Nigerian founders, families and businesses decide whether they need an offshore company, choose the right jurisdiction and set up the structure lawfully. We work with trusted agents and lawyers abroad, prepare share structures and intercompany agreements, carry out Delaware flips and keep the Nigerian side compliant. See our corporate structuring and international expansion service, or, for foreign investors coming into Nigeria, our guide on how to register a foreign-owned company in Nigeria. To discuss your plans, contact us.
Frequently asked questions
Is it legal for a Nigerian to own an offshore company?
Yes. Nigerians can lawfully own companies registered abroad. They must comply with Nigerian tax, foreign exchange and disclosure rules, and certain public officers are restricted from holding foreign bank accounts.
What is the best country to register an offshore company for Nigerians?
It depends on the purpose. Delaware suits startups raising US venture capital, the UK and UAE suit trading and consulting businesses, and Mauritius, Rwanda or the British Virgin Islands are often used for holding and investment structures.
Can a Nigerian open a Delaware company?
Yes. Non-residents can incorporate a Delaware company through a registered agent, usually online. Opening a US bank account and complying with US tax filings are separate steps that need planning.
Do I pay tax in Nigeria if I have an offshore company?
Often, yes. Nigerian residents are generally taxed on their worldwide income, and income from an offshore company, such as dividends, salaries or fees, may be taxable in Nigeria. Rules on foreign companies controlled by Nigerian residents may also apply.
How long does it take to set up an offshore company?
Incorporation can take days in many jurisdictions. Due diligence, bank account opening and licensing usually take longer, often several weeks.
Can an offshore company own a Nigerian company?
Yes. A foreign company can own shares in a Nigerian company, subject to Nigerian foreign investment rules, NIPC registration, capital importation and, in regulated sectors, regulatory approval.
Is an offshore company the same as a tax haven company?
No. An offshore company is any company registered abroad. Many offshore jurisdictions now have economic substance rules, beneficial ownership registers and information exchange agreements, and offshore companies must be used for genuine business purposes.
Do I need to tell the CBN about my offshore company?
There is no general registration with the CBN, but money moving between Nigeria and the offshore company must pass through authorised dealer banks under CBN rules, and changes in ownership of CBN-licensed businesses need CBN approval.
