INTRODUCTION

The Federal Government of Nigeria has recently introduced the Expatriate Employment Levy ("EEL") on 27 February 2024. This levy is mandatory for employers hiring foreign workers in Nigeria, aiming to facilitate knowledge and skill transfer from expatriates to local employees through training and mentorship programs.

This article explores the handbook's key provisions and Nigerian companies' obligations to expatriate employees.

KEY PROVISIONS

1. APPLICABILITY OF THE EXPATRIATE EMPLOYMENT LEVY ("EEL")

The EEL affects private sector industries and companies employing foreign workers or relying on expatriate labour. Employers are liable for the levy, which applies to non-citizen or non-resident expatriates in quota positions or engaged through Temporary Work Permits employed for not less than 183 days in a fiscal year. However, dependants of expatriate workers, accredited diplomatic mission staff, government officials, and short-term/temporary workers spending less than 183 days in Nigeria within a year and other organizations or persons on the Nigeria Immigration Service approved list are exempted.

2. EXPATRIATE EMPLOYMENT LEVY RATES

Employers must pay $15,000 (Fifteen Thousand United States dollars) for directors and $10,000 (Ten Thousand United States dollars) for other categories of expatriates.

3. SANCTIONS

  • N3,000,000 (Three Million Naira) for failure to file the Expatriate Employment Levy within thirty (30) days.
  • N3,000,000 (Three Million Naira) for failure to register new employees within thirty (30) days.
  • N3,000,000 (Three Million Naira) for falsifying the Expatriate Employment Levy
  • N3,000,000 (Three Million Naira) for failure to renew the expatriate employment levy before expiration.

Any further penalties will be based on the requirements of Regulation 52(6) of the Immigration Regulations 2017.

4. OBLIGATIONS AS AN EXPATRIATE EMPLOYER

  1. Compliance: ensuring full compliance with the newly implemented EEL is imperative. Failure to comply as regarding filing existing expatriates, registration of new employees, renewing before the expiration date and, submitting false information, results in a penalty of up to N3,000,000.00 (Three Million Naira Only) fine.
  2. Maintaining Comprehensive Records: Employers must maintain comprehensive records related to their expatriate employee (s) and evidence of payment of their EEL, both of which are subject to audits by the Nigeria Immigration Service.
  3. Timely Reporting: Employers are required to provide information and updates and notify relevant agencies of changes within stipulated timeframes.

5. REGISTRATION & COMMENCEMENT

Employers must register expatriate employees via an online reporting portal per the EEL Handbook. Though not expressly contained in the handbook, the ministry noted that implementation starts on 15 March 2024, with a compliance deadline set for 15 April 2024.

6. PAYMENT OF LEVY

Though the levy fees are provided for in US dollars, payment can be made in Naira based) based on the daily exchange rate, akin to the CERPAC.

7. CHECKS IN PLACE TO ENSURE ADEQUATE COMPLIANCE

  • Receipt and EEL Digital Card notification will be sent to the User's registered email upon successful payment.
  • The EEL card will be deemed a mandatory document like an international passport or Combined Expatriate Residence Permit and Aliens Card (CERPAC).
  • It would be required for any expatriate to leave and enter the country.

CONCLUSION

While the EEL aims to foster local workforce development, concerns arise regarding its potential negative impact on foreign investment in Nigeria. Implementing the EEL will lower the country's ranking in the ease of doing business index, potentially prompting businesses to relocate to neighboring countries with more favorable conditions.

We anticipate more clarity on issues like the impact of the EEL on ECOWAS nationals in Nigeria, expatriates in the free trade zones, explicit timelines implementation, activation of the EEL portal/website, dominations of payment (USD or Naira) and many other ambiguities.

While we await clarity on the above, we advise affected organizations to:

  • Re-evaluate and re-assess the cost of employing expatriates;
  • Develop a framework to aid compliance with the EEL;
  • Build and strengthen their understudy system to ensure practical knowledge and skills transfer.

Click here to read An Overview Of The Expatriate Employment Levy In Nigeria - UPDATE

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.