Business & Economy

Employers Decline FG’s Expatriate Employment Levy

Published

10 months ago

Mar 4, 2024.

Eko Hot Blog reports that The Nigeria Employers’ Consultative Association has cautioned that the expatriate employment levy imposed by the Ministry of Interior could discourage investments in the country.

The association criticized the tax, highlighting the necessity for specific regulations to precede the implementation of such levies.

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In a statement on Sunday, NECA said that following the launch of the Expatriate Employment Handbook, an initiative of the Federal Ministry of Interior, purportedly aimed at enhancing skills transfer in Nigeria, the new levy would frustrate the Federal Government’s ongoing fiscal and monetary reforms if implemented.

The Director-General of NECA, Adewale-Smatt Oyerinde, “It will also serve as a disincentive to Foreign Direct Investment among many other unintended negative consequences. The levy of between $10,000 to $15,000 on employers that employ expatriates when Nigeria is actively seeking FDI is not only exploitative and extortionist but also a contradiction that cannot be explained.”

“While we support the Federal Government’s objective of developing the local workforce, we have been at the forefront of promoting skills transfer, technical skills development, and employment generation.

He added, “However, the recently launched initiative of the Ministry of Interior has the potential to create more fundamental economic and socio-labour distortions.“

“The imposition of US$15,000 and US$10,000 on organisations that employ expatriates at a time when businesses are shutting down and leaving the country in droves is worrisome. Recent results of many businesses have shown massive losses, a situation that could potentially increase the level of unemployment with dire socio-economic consequences.”

While raising organised businesses’ concern on the legality and appropriateness of the levy, Oyerinde said, “We are concerned at the legality and appropriateness of the Expatriate Employment Levy as well as its effect on the economy. The provisions of a Handbook can never override clear provisions of extant laws in Nigeria, especially the 1999 Constitution of the Federal Republic of Nigeria, Immigration Act, and the Local Content Act among others.”

According to him, the Ministry of Interior and indeed, government cannot impose a tax or levy without appropriate legislation.

He said, “For instance, Section 59 of the Nigerian Constitution requires that any imposition of tax, duty, fee, or levy must be backed by an Act of the National Assembly. Levies that are imposed without complying with the provisions of section 59 of the Constitution offends the Constitution and are illegal.”

The NECA chief also observed that “existing legislations, such as the Local Content Act and Immigration Act have already addressed objectives like those of the EEL Handbook – thus, covering the field. Therefore, the introduction of additional levies is an unnecessary duplication and could impede the ease of doing business in Nigeria.”

Oyerinde noted that “the levy, if implemented, will not only distort, and frustrate the ongoing efforts at clear reform of the Fiscal and Monetary space but also contradicts and render ineffective the President’s ongoing quest for Foreign Direct Investment.

Furthermore, a reciprocal implementation of the same policy by other countries will have dire consequences on the careers and progress of Nigerians who are expatriates in other nations.”

He recommended enhancing current regulatory institutions overseeing expatriate employment instead of introducing extra fees. This approach aims to establish a more responsive and accountable regulatory framework for implementing existing laws.

He emphasized the importance of implementing fiscal incentives to boost investment appeal, maintain business stability, and prioritize measures that simplify doing business to attract both domestic and international investors.