NIGERIA Law and Practice Contributed by: Ben Unaegbunam, Omolola Coker, Sanford Mba, Promise Osimhen, Chidera Chikere and Oluwaseun Denagan, Dentons ACAS-Law (Adepetun, Caxton-Martins, Agbor & Segun)
dential Guidelines require transparent disclosure of interest rates and fees, promoting compliance and borrower protection. A notable recent development is the Federal Competition and Consumer Protec- tion Commission (FCCPC) Digital Lending Regula- tion 2025, under which the FCCPC oversees interest rates charged by digital and non-traditional lenders to prevent exploitative practices. Additionally, Nigerian courts may intervene in cases where interest rates are deemed unconscionable or extortionate. 3.11 Disclosure Requirements Disclosure obligations for financial contracts in Nigeria promote transparency, investor and consumer pro- tection, and regulatory compliance. Requirements depend on the contract type, parties, and regulatory framework. Banks and regulated financial institutions are required to disclose key loan terms including interest rates, fees, repayment schedules, and collateral under CBN Prudential Guidelines and BOFIA, ensuring borrowers understand their obligations and risks. For securities such as bonds, debentures, or structured products, disclosure is governed by SEC Rules under the Invest- ment and Securities Act 2025. Issuers must provide prospectuses or offering memoranda detailing terms, risks, financial position, and any material contracts or guarantees. Under Nigerian law, interest payments made by a Nigerian borrower to a lender are generally subject to withholding tax (WHT) at the rate of 10%, which functions as an advance corporate-income tax. How- ever, where the interest is paid under a loan to lend- ers in countries with a concessionary withholding tax arrangement with Nigeria, the WHT is 7.5%. Following the FIRS Information Circular No: 2022/15 on “Claim of Tax Treaties Benefits and Commonwealth Relief in Nigeria”, the principal treaty partners benefiting from the 7.5% for interest are South Africa, China, Singa- pore, Spain and Sweden. 4. Tax 4.1 Withholding Tax
In practice, lenders typically include tax gross-up pro- visions which ensure that where a borrower is obli- gated to withhold taxes, it grosses up the payment so that the lender receives the full amount it would have received absent withholding. 4.2 Other Taxes, Duties, Charges or Tax Considerations The following taxes, duties and charges are relevant to lenders advancing credit facilities to Nigerian entities or taking security and guarantees in support thereof. Stamp Duties Stamping is required to be done within 30 days of the execution of such a loan or security instrument or within 30 days of such an instrument being brought into Nigeria. Stamp duties chargeable may be a nomi- nal amount or calculated at an ad valorem rate on the secured amount, depending on the nature of the transaction as assessed by the Stamp Duties Com- missioner. Loan documents are chargeable to stamp duties at the ad valorem rate of 0.125% of the loan amount. Security instruments such as legal mortgag- es, debentures, and similar registrable charges attract stamp duty at the ad valorem rate of 0.375%. Guaran- tee instruments, by contrast, are subject to a nominal flat duty of NGN500. To manage transactional costs that may arise under Nigerian law, typically, in prac- tice, parties may choose to stamp the security docu- ments for a lesser amount than the facility sum and then upstamp for an additional amount at a later date. Consent Fees In the case of a mortgage over real estate, an ad valo- rem fee is payable for obtaining the consent of the governor; such fee is charged at a rate of 1% to 13% of the secured amount, depending on the state where the land/property is situated. Registration Fees Security documents creating charges on any asset of a Nigerian company are required to be registered at the CAC within 90 days of their creation. Registra- tion of charges at CAC attracts a fee of 0.35% of the secured obligation. Further registration fees may be required for perfection of regulated assets at the vari- ous statutory registries, as may be stipulated by the different sector regulators.
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