NIGERIA IMPOSED A NEW EXPATRIATE EMPLOYMENT LEVY ON COMPANIES WITH FOREIGN EMPLOYEES

???????? The Federal Government of Nigeria has imposed an Expatriate Employment Levy (EEL) on companies employing the services of foreign workers in Nigeria. The Federal Government decided it was crucial to implement the EEL, which aims to strike a balance between economic growth, social equality and workforce development, as the country’s import workforce continues to expand.

?

THE EXPATRIATE EMPLOYMENT LEVY

The Expatriate Employment Levy is levied against employers who hire foreign employees in Nigeria. The purpose of this levy, which is primarily based on foreign workers' offshore earnings in Nigeria, is to balance economic growth, according to the government.

?EXEMPTIONS FROM THE EXPATRIATE EMPLOYMENT LEVY

????? The Expatriate Employment Levy is not required to be paid by any employees of diplomatic missions, government representatives, or foreign organisations accredited in Nigeria.

?

HOW THE EXPATRIATE EMPLOYMENT LEVY APPLY TO SHORT-TERM EMPLOYMENT

??? Where an Expatriate’s employment or assignment lasts for less than 183 days in a fiscal year, starting from the date of entry into Nigeria for the employment or assignment, they may be released from paying the Expatriate Employment Levy.

?

SCOPE OF INDUSTRIES COVERED BY THE EXPATRIATE EMPLOYMENT LEVY

? ???The private sector industries covered by the Expatriate Employment Levy are those that rely on or use foreign labour, including construction, manufacturing, oil and gas, banking and finance, information and communication technology (ICT), agriculture, and healthcare services among others.

REGISTRATION & COMMENCEMENT

Employers must register their expatriate employees using an online reporting portal, as mandated by the EEL Handbook. The implementation date for the EEL has been set as 15 March 2024. All companies have till 15 April 2024, to comply. Expatriates subject to the EEL include those on expatriate quota or residing in Nigeria for at least 183 days within 12 months.

?

HOW MUCH IS THE EXPATRIATE EMPLOYMENT LEVY?

???? Employers of foreign nationals subject to the Expatriate Employment Levy must pay 10,000 USD for non-director foreign nationals and 15,000 USD for directors. The fee is payable annually. The companies will be entitled to deduct the amount as an incurred business operating cost.

?

HOW AN EMPLOYEE CAN BE REPLACED IN AN EXISTING EXPATRIATE EMPLOYMENT LEVY

?????? Until the current Expatriate Employment Levy validation, employers are free to reallocate positions held by departing employees to new hires. During the validation phase, the Expatriate Employment Levy permits unrestricted modifications.

?

SANCTIONS FOR FAILURE TO PAY EXPATRIATE EMPLOYMENT LEVY

The employers must comply with the monthly reporting system mandated by the Nigerian Immigration Services. Moreover, employers must ensure that the data they supply is correct and current to avoid sanctions or penalties. Penalties may result from inadequate or inaccurate reporting. The applicable penalties and sanctions are as follows:

• A corporate organisation would be fined N3,000,000 if it fails to file the Expatriate Employment Levy within thirty (30) days.
• There is a fine of N3,000,000 for failing to register new employees within thirty (30) days.
• Falsifying facts on the Expatriate Employment Levy may result in a fine of N3,000,000.
• A corporate entity faces a fine of N3,000,000 if it fails to renew the expatriate employment levy within thirty (30) days.

?? The requirements of Regulation 52(6) of the Immigration Regulations 2017 will serve as the basis for any further penalties.

?

?????? Finally, the Federal Government of Nigeria has decided it is necessary to impose the new Expatriate Employment Levy to strike a balance between economic growth, social equity, and workforce development, considering the high unemployment rate in Nigeria. The main goals of Expatriate Employment are to protect Nigeria's domestic labour markets and to curb the abuse of the expatriate quota system. However, the majority of stakeholders such as the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigeria Employers Consultative Association (NECA) opposed the levy and described it as a double taxation illegally imposed without any statutory provision backing it.

Postscript:

On the 8th of March 2024, the Federal Government and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) announced that the EEL has been suspended indefinitely pending further consultation.

?

By Corporate & Commercial Law Team at Resolution Law Firm

Email: [email protected]