March 4, 2024

NECA rejects expatriate employment levy

NECA rejects expatriate employment levy

By Victor AhiumaYoung

The Nigeria Employers’ Consultative Association, NECA, weekend, raised the alarm over the expatriate employment levy, EEL, announced by the Federal Government, last week, warning that it would discourage investment if implemented.

According to NECA: “If implemented, the levy will not only frustrate the Federal Government’s on-going Fiscal and Monetary reforms, it will also serve as a disincentive to Foreign Direct Investment, FDI, among many other unintended negative consequences.”

Recall that following the launch of the Expatriate Employment Handbook, EEH, an initiative of the Federal Ministry of Interior aimed at enhancing skills transfer in Nigeria, it announced a levy of between US$10,000 to US$15,000 on employers that employ expatriates.

In a statement by the Director-General of the Association, Adewale-Smatt Oyerinde, among others, said “While we absolutely support the Federal Government’s objective of developing the local workforce, we have, in fact, been at the forefront of promoting skills transfer, Technical Skills Development and employment generation. 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 organizations 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 Organized Businesses’ concern about the legality and appropriateness of the levy, the Director-General stated “We are concerned at the legality and appropriateness of the Expatriate Employment Levy (EEL) 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.

“The Ministry of Interior and indeed, the Government cannot impose a tax or levy without appropriate legislation.

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 offend the Constitution and are illegal.

“Existing legislations, such as the Local Content Act and Immigration Act have already addressed objectives similar to 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.

“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.

“We urge that the government should seek to strengthen existing Regulatory Institutions responsible for managing expatriate employment rather than imposing additional levies.”

thus ensuring a more responsive and accountable regulatory framework in the implementation of extant laws; the adoption of fiscal incentives to enhance investment attractiveness, support business stability, and prioritize measures that facilitate ease of doing business to attract both local and foreign investors; collaborative efforts between the government and private sector to explore alternative revenue streams and promote wealth creation through dialogue and stakeholder engagement.”

Oyerinde acknowledged the government’s objectives but emphasized “the importance of pursuing strategies that foster a conducive investment climate without imposing undue burdens on businesses. Collaboration between the private sector and Government is essential to finding equitable solutions that promote economic interests and support sustainable business growth.”