Expatriate employment levy in Nigeria

The EEL is “a financial contribution imposed on employers who have expatriate workers”.

Employers are to pay USD 15,000 per person for director level staff, and USD 10,000 per person for other categories of staff. The staff person must be resident in Nigeria for at least 183 days from the date of entry into Nigeria for the employment levy is to be paid annually.

The effective date for the EEL was 15 March 2024, and employers had until 15 April 2024 to comply.

Staff of diplomatic missions, staff of international agencies, and government officials accredited to Nigeria are exempt from the EEL.

Objectives/justification for the EEL include:

• Increase foreign exchange revenue for Nigeria; 
• Reduce the number of expatriates (at least 150,000) working in Nigeria who do not possess specialised skills that Nigerians lack;
• Increase employment for Nigerians with the education and expertise for jobs that a number of Nigerian companies have previously hired expatriates to do; and 
• Close the wage gap between Nigerians and expatriate workers.

Stakeholders, including the Manufacturers Association of Nigeria, the Nigerian Employers Consultative Association, the Centre for Promotion of Private Enterprises, and the Lagos Chamber of Commerce and Industry, appealed to the federal government to suspend the EEL to allow for a holistic review.

The reasons for the appeal include:

• There was no enabling legislation for the EEL and the EEL Handbook. An Act from the National Assembly is mandatory for the EEL.
• The one month timeline for compliance was too short.
• The US dollar is not the legal tender of Nigeria. Employers would need to source for the USD in the unofficial market, putting pressure on the naira (NGN) and further exacerbating the naira’s devaluation. 
• Employers of foreign workers already pay for a combined expatriate residence permit & alien card which costs the naira equivalent of USD 2,000 for each expatriate employee.
• There will be an increase in the cost of doing business for companies that hire expatriates. These costs will be transferred to Nigerian consumers. 
• Relocation of expatriate employees to neighbouring countries will likely result from this new requirement, with limited knowledge transfer to Nigerians.
• EEL requirements will reduce “pay as you earn” taxes paid by the expatriate employees to some state governments, and will reduce the remittance of corporate income tax as some companies will leave Nigeria.
• The EEL will encourage other countries with whom Nigeria has bilateral treaties –Economic Community of West African States (ECOWAS), African Continental Free Trade Agreement (AfCFTA), etc. – to impose similar levies on Nigerians working in their countries. This will reduce Nigerian diaspora remittances to Nigeria. 

Conclusion

We await the results of the holistic review of the EEL by all stakeholders including the Ministry of Interior and the Nigerian Immigration Service.

Helen E. Ijewere is currently the Regional Chair MEA of the GGI Global Mobility Solutions Practice Group. She is a Director at Nolands Nigeria. Her areas of specialisation are Global Mobility Solutions, Tax, Corporate Governance, Risk, Ethics, Compliance and Fraud. She joined the firm in January 2016 from private practice. She has a JD from the University of North Carolina School of Law, Chapel Hill, NC, USA, and a BA from Trinity College, Washington, DC, USA.