Foreign Direct Investment in Lagos: Inland Revenue Service’s Taxation Framework.

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Foreign Direct Investment (FDI) plays a pivotal role in the economic development of any region. In Lagos, Nigeria’s economic hub, attracting FDI is a top priority, and the Lagos Inland Revenue Service (LIRS) has developed a robust taxation framework to support and encourage foreign investors. This article explores the LIRS’s approach to taxation of FDI, highlighting its significance, key components, and the impact it has on fostering a favorable investment climate in Lagos.

The Role of FDI in Lagos:

Foreign Direct Investment brings capital, technology, expertise, and job opportunities to the host region. In Lagos, which is Nigeria’s commercial and financial center, FDI is instrumental in driving economic growth, creating employment opportunities, and contributing to infrastructure development.

LIRS’s Taxation Framework for FDI:

  1. Tax Stability Agreements: The LIRS may enter into tax stability agreements with foreign investors. These agreements provide investors with certainty about their tax liabilities for a specified period, promoting investment security.
  2. Tax Treaties: Nigeria has signed Double Taxation Agreements (DTAs) with several countries. These treaties prevent double taxation of income and provide mechanisms for resolving tax disputes, making Lagos an attractive destination for FDI.
  3. Incentives: The LIRS offers tax incentives to certain sectors and industries, such as manufacturing and agriculture, to encourage FDI. These incentives may include tax holidays and reduced tax rates.
  4. Transfer Pricing Regulations: The LIRS has established transfer pricing regulations to prevent profit shifting and ensure that transactions between related parties, including foreign investors and their subsidiaries, are conducted at arm’s length.
  5. Customized Tax Assessments: The LIRS conducts tailored tax assessments for foreign investors to ensure compliance with local tax regulations while considering international tax treaties and agreements.

Impact on Investment Climate:

The LIRS’s taxation framework for FDI has several significant implications for the investment climate in Lagos:

  1. Attractiveness: By offering tax stability, incentives, and adherence to international tax standards, Lagos becomes an attractive destination for foreign investors seeking a stable and predictable tax environment.
  2. Competitiveness: A competitive tax regime compared to neighboring regions enhances Lagos’s competitiveness in attracting FDI.
  3. Investor Confidence: Transparent and fair taxation practices build investor confidence in Lagos, fostering long-term commitments and partnerships.
  4. Economic Growth: FDI leads to increased economic activity, job creation, and infrastructure development, benefiting both the local community and the broader economy.
  5. Global Integration: Adherence to international tax standards and DTAs promotes Lagos’s integration into the global economy, encouraging cross-border investments.


The Lagos Inland Revenue Service’s taxation framework for Foreign Direct Investment reflects its commitment to fostering a favorable investment climate in Lagos. By providing transparency, stability, and incentives, the LIRS creates an environment where foreign investors can thrive and contribute to the economic development of Lagos. As FDI continues to play a crucial role in shaping the city’s growth trajectory, the collaboration between the LIRS and foreign investors will be instrumental in driving mutual prosperity and sustainable development in Lagos, Nigeria.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, . You can also reach us via WhatsApp at +2348038460036.