Abdul Muhammed Law Practice
Abdul Muhammed Law Practice provides you with an optimized and logically structured presentation format for the guidelines for registering management service fees agreements with NOTAP.
Introduction
Management service fees agreements play a vital role in various sectors, primarily based on a percentage of profit before tax, except for hotel management by international chains.
- Fee structure
Management service fees range from 2% to 5% of profit before tax. The percentage depends on the extent of management services to be provided by the technical partner.
- High technology management
The upper limit of management service fees applies strictly to agreements involving ‘high technology management.’
- Basis of fees
Fees are calculated based on the profit earned by the Nigerian company, not on its sales or turnover.
For projects without anticipated profits in the early years, 1% to 2% of net sales may be approved for the first 3 to 5 years.
- Agricultural and agro-allied projects
For projects in these sectors during the gestation period, lump sum payments are allowed. After the gestation period, fees shall be based on net sales or profit like other sectors.
- Manufacturing sector
Management service fees are allowed in the manufacturing sector, particularly for services related to the daily management of factories by expatriates.
The aim is to ensure profitability and international product standards adherence.
- Fee range in manufacturing
In the manufacturing sector, management service fees agreements are approved by NOTAP at profit before tax ranging from 0% to 5%.
- Agreement scope
The scope of the management service fees agreement in the manufacturing sector involving services must clearly outline the responsibilities of the foreign party.
- First application requirement
The first step in applying for management service fees agreements involves the submission of the Management Services Agreement.
Additionally, provide all other requisite technical know-how agreements that are applicable.
These guidelines offer a comprehensive framework for registering management service fees agreements with NOTAP. They ensure compliance with regulations, appropriate fee structuring, and clarity in defining the roles and responsibilities of the involved parties.
Conclusion
Feel free to use this structured format as a reference for your work related to management service fees agreements under the NOTAP Act. If you have further questions or need more assistance, don’t hesitate to ask.
READ: NOTAP: Guidelines for registering a technical know-how agreement
