Regulatory compliance is an integral part of business operations. Every Nigerian company must prioritize compliance and maintain ethical standards in all business operations to avoid legal troubles.
Nigerian law provides for mandatory registrations and filing of periodic returns with certain regulatory agencies. The mandatory regulatory registrations and approvals are required for different purposes. For instance, the Nigeria Social Insurance Trust Fund (“NSITF”), Industrial Training Fund (“ITF”) and Bureau of Public Procurement (“BPP”) compliance certificates are required by most Ministries, Departments and Agencies of the government for award of public contracts. This is to ensure that every supplier, contractor or consultant bidding for contracts, businesses, goods and services from any Federal Government Ministry, Department, Agency fulfills the statutory obligations of its employees concerning payment of contributions to the government funds.
In this article, we examine the requirements, costs and timeline for processing NSITF, ITF and BPP compliance certificates.
- NIGERIA SOCIAL INSURANCE TRUST FUND (“NSITF”)
The NSITF Act 1993 established the NSITF as a governmental institution committed to the welfare of employees in the private sector. The NSITF was mandated to provide retirement benefit, survivors benefit, death grant, invalidity benefit, invalidity grant and other benefits to employees as may be approved from time.
Under the NSITF Act, all employers of labour in the private sector registered under the Companies and Allied Matters Act (CAMA), either as companies or partnerships, irrespective of the number of their employees (or where sole businesses with a workforce of not less than five (5) employees), are required to register as members of the NSITF Scheme and remit their contributions monthly. Employers are mandated to remit 1% of their payroll to the fund.
a. Are there persons/companies exempted from contributing to the NSITF?
The NSITF Act exempts the following:
- Persons employed in the public service of the Federation or a State or local government who is entitled to the benefit of any scheme or pension on terms substantially similar to those prescribed by the Pensions Act;
- a person who is entitled to diplomatic or equivalent status under the Diplomatic Privileges and Immunities Act; or
- a person not being a citizen of Nigeria who is employed in Nigeria for a period less than six years at a time, if the employee is liable to contribute to or is prospectively entitled to benefits from the social security scheme of any country other than Nigeria; or
- a minister of religion who is engaged in the propagation of his faith.
b. What are the requirements for registration?
The requirements for registration are as follows:
- Company Incorporation documents
- Duly completed Registration Form
- Duly completed Payroll Schedule Form
- Evidence of payment of prescribed fees.
Upon successful registration, a Letter of Notification– With 10 Digit Registration Number will be issued to the employer by the NSITF.
Please note that there is issuance of yearly Employee’s Compensation Scheme (ECS) Compliance Certificate to employers by the NSITF. The requirements for Certification of employers are as follows:
1. Official letter of request by the Employer on the company letterhead
2. Copy of Registration Documents e.g. Letter of Incorporation with CAC
3. Copy of Registration form ECS RE 01- stating Company Name, Address, and Telephone No Etc.
4. Copy of Payroll Schedule Form RE 03 stating employee’s details- Staff Name, ID Number, Gender, and Remuneration.
5. Submission of the 10 Digit Registration Number (Notification of Registration)
6. Copy of official NSITF receipt showing evidence of payments.
The timeline for completion is about seven (7) after submission of application for the ECS Compliance Certificate.
c. Are there penalties for non-compliance?
According to Section 13 of the NSITF Act, monthly contributions become due on the last day of each month. If any contribution is not paid within this time, five per cent (5%) of the amount unpaid, shall be added for each month or part of the month after the date when payment should have been made. Any unpaid contribution and interest shall be recoverable as a debt owed to the NSITF from the employer.
d. What are the applicable costs?
The costs, excluding professional fees, are based on an assessment of the number of employees of the company and the remuneration schedule.
2. INDUSTRIAL TRAINING FUND
The Industrial Training Fund (“ITF”) was established pursuant to the Industrial Training Fund (Amendment) Act 2011, to provide and promote the acquisition of skills in industry and commerce. The goal of the ITF fund was to generate a pool of indigenous trained manpower sufficient to meet the needs of the private and public sectors of the Nigerian economy. The ITF Act applies to both public and private entities.
The ITF Act obligates every employer having either five (5) or more employees in its establishment, or having less than five (5) employees but with a turnover of N50m and above per annum, to contribute 1% (one percent) of its total annual payroll to the ITF.
Companies utilizing custom services in matters of export and import must show proof of compliance in respect of payment of training contributions of their employees.
a. What are the requirements for registering a new employer?
The requirements for registering a new employer are as follows:
- Duly completed ITF Form 7;
- Company Incorporation documents;
- Certified true copies of the company’s Audited Account;
- Tax Clearance Certificate of the company;
- Evidence of payment of prescribed fees.
Upon successful completion of the registration, the employer will be issued a Certificate of Compliance. The certificate is given to an employer as evidence of compliance with the ITF Act.
b. What is the procedure for registration?
- Upon submission of the documentary requirements mentioned above, the company’s liability will be assessed by ITF Revenue, Inspectorate and Compliance Officers.
- The applicant company will generate RRR through the ITF Pay-portal or Remita Platform and make payment through the Bank.
- The company shall take the receipt of payment and duplicate teller from the Bank to the ITF Office.
- A hard copy of the receipt, acknowledgement letter and ITF National Number shall be issued to the client;
- A Certificate of compliance will be given to the client as evidence of compliance with the ITF Act.
c. Are there companies that are exempted from contributing to the ITF Fund?
Yes, there are exempted companies. Companies with less than five (5) personnel, or less than Fifty (50) Million Naira annual turnover, are not required to pay ITF Fund contributions and do not require an ITF Compliance Certificate.
d. What are the applicable costs for ITF registration?
The costs, excluding professional fees, are as follows:
- One-time payment of N100,000 for Compliance Certificate;
- 1% of the annual payroll of the company after an assessment of the number of employees of the company and the remuneration schedule.
e. Are there penalties for non-compliance with the ITF Act?
If any contribution is not paid before the 1st of April in each year, an employer shall pay the outstanding contribution and five per cent (5%) of the amount unpaid for each month or part of a month after the date on which payment should have been made.
Moreso, all employers who pay their annual training contributions are required to provide adequate training for their indigenous staff and accept students for industrial attachment purposes.
Please note that an employer who is in breach of the above obligation shall be liable to:
- in the case of a body corporate, a fine of N500,000 (Five Hundred Thousand Naira) for a first offence, and N1,000,000 (One Million Naira) for each subsequent breach; and
- in the case of the Chief Executive, Secretary or other Principal Officers of the company, a fine of N50,000 (Fifty Thousand Naira) or two years imprisonment for a first offence and three years imprisonment without option of fine for each subsequent offence.
3. BUREAU OF PUBLIC PROCUREMENT
The Bureau of Public Procurement (“BPP”) was established pursuant to Section 3 of the Public Procurement Act 2007. The BPP is charged with the responsibility to amongst others, ensure accountability and transparency in public procurement in Nigeria. Contractors, Consultants and Service Providers (CCSPs) doing business/intending to do business with the Federal Government of Nigeria are required to register with the BPP.
a. What are the requirements for registration with the BPP?
The requirements for registration with the BPP are as follows:
- Company incorporation documents;
- Tax Identification Number;
- Details of Board of Directors;
- Professional Regulatory Bodies Information (For Services Companies only);
- Manufacturer Representation Information (For Goods category only);
- Construction Equipment List (For Works category only);
- Financial Capacity of the company;
- Key Human Resources;
- List of Projects Completed;
- Terms & Conditions.
b. What are the applicable registration costs?
Registration with BPP is free.
c. What is the estimated timeline for registration with NSITF, ITF and BPP?
Registration with NSITF and BPP takes an average of 5 working days.
Registration with ITF takes an average of 10 working days.
