STARTUPS NOW REQUIRE ADDITIONAL CERTIFICATION
• Before a company can enjoy the benefits under the Act, it must obtain a Certificate known as the startup “label”. By this, only entities with the startup label can be considered as startups for the purpose of the Act.
• The Act establishes a startup investment seed fund through which startups can access financing.
BENEFITS OF OBTAINING A STARTUP LABEL
• Eligibility to access special funds
• Access to grants and loan administered by the Central Bank of Nigeria (CBN) and Bank of Industry (BOI)
• Eligibility for possible four years tax exemptions and other tax incentives.
• Eligible employees of a labelled startup are entitled Personal Income Tax exemption of 35% of the income of the employee for a period of two years from date of engagement.
ELIGIBILITY FOR GRANT OF STARTUP LABEL
• According to the Act, to be labelled a startup, the entity must be registered as a Limited Liability Company under the Companies and Allied Matters Act 2020.
• The startup must have been in existence for a period of not more than 10 years from the date of Incorporation.
• It must have at least one Nigerian as a co-founder.
• Its business object must include: “innovation, development, production, improvement, and commercialisation of a digital technology innovative product or process”.
The Startup Act was signed into law on the 19th day of October 2022
Arome Abu is the Managing Partner of TCLP.
CAVEAT: Note that this information is provided for general enlightenment purposes and is not intended to be any form of legal advice.
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