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4 Common Compliance Mistakes Nigerians In Diaspora Make

4 Common Compliance Mistakes Nigerians In Diaspora Make

Ted Iwere
July 15, 2025

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IN THIS ISSUE

4 Common Compliance Mistakes Nigerians In Diaspora Make

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4 Common Compliance Mistakes Nigerians In Diaspora Make

Imagine you’ve saved $50,000 from your job in Canada to start a tech company in Lagos. You’re excited, motivated, and ready to make your mark.

But six months later, you find yourself drowning in unexpected fees, facing government shutdowns, and wondering where it all went wrong.

This scenario plays out for hundreds of diaspora entrepreneurs every year. The difference between those who succeed and those who fail is understanding regulatory compliance in Nigeria before they start – not after.

In this article, we will highlight the 4 most costly compliance mistakes and explain how to avoid them.

Mistake 1: Ignoring Tax Registration Requirements

One common mistake we see is when Nigerians in the diaspora begin operations before registering for taxes, thinking they can sort it out once the business is underway.

This mindset is a trap that can lead to back taxes, penalties, and disruptions in business operations.

To avoid this mistake, register for taxes before starting operations, obtain your Tax Identification Number (TIN) within 30 days of CAC registration, and set up automated tax payment systems. Be sure to file returns even if you have no income yet.

Mistake 2: Overlooking Industry-Specific Licences

For some industries, simply having a CAC registration is not enough.

Diaspora Nigerians who assume that CAC registration is sufficient for legal operation without researching specific licences can quickly face substantial regulatory fees.

Imagine starting a cosmetics company without registering with NAFDAC. Your business could be shut down, your goods seized (often resulting in destruction or non-return), and you may face regulatory tax audits and various legal charges.

To avoid these pitfalls, it’s crucial to research ALL industry-specific requirements before starting. Seek professional advice for regulated industries, apply for licences before importing goods or commencing operations, and ensure you maintain active licences with timely renewals.

Mistake 3: Violating Labour Laws Unknowingly

Another mistake we often observe is when diaspora Nigerians hire employees without understanding Nigerian labour laws and obligations.

They may base their hiring practices on assumptions or knowledge of foreign employment laws.

This oversight can lead to wrongful termination claims, inadequate pension contributions, and more.

As many entrepreneurs have learned, this can lead to judgments from industrial courts that can bankrupt your businesses.

To avoid this mistake, take the following steps:

Register with the Nigeria Social Insurance Trust Fund (NSITF)
Set up arrangements with Pension Fund Administrators (PFA)
Understand minimum wage requirements
Use proper employment contracts
Implement correct termination procedures

Mistake 4: Poor Record-Keeping and Documentation

For many Nigerians in the diaspora, a recurring error is poor record-keeping and inadequate documentation for regulatory compliance, which becomes even more challenging when managing businesses remotely.

Neglecting proper record-keeping can lead to the imposition of additional taxes, penalties, further investigations, and extra professional fees.

The best way to avoid this mistake is by implementing a simple digital document management system.

Some good tips to do that well are to maintain separate files for each regulatory requirement, keep financial records for a minimum of 6 years, store documents in multiple locations (both cloud and physical), and ensure they are regularly backed up.

Action Steps

Every day you delay proper compliance is a gamble with your business’s future. The mistakes outlined here have destroyed countless diaspora businesses, but they don’t have to destroy yours.

We help you navigate Nigeria’s challenging regulatory environment.

Contact us today and our team will help you understand and comply with relevant laws, regulations and industry standards, and minimise the risk of non-compliance and reputational damage.

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