Bicci Alli
On twenty seventh February 2024, the federal authorities launched its Expatriates Employment Levy (EEL) Handbook. The levy is authorities mandated contributions imposed on employers who make use of expatriate employees in Nigeria. The EEL seeks to stability financial development, social fairness and workforce improvement. As well as, the levy will guarantee equilibrium of expatriate employment with the safety of Nigeria’s native labour markets and assets.
As specified within the Handbook, laudable and commendable aims of the EEL embrace however not restricted to advertise ability switch and data sharing, stability financial development and social welfare, improve collaboration between Public and Non-public sector and deal with demographic shifts. EEL card is a compulsory doc like passport, and can be required on the time of lawful exit and entry into the nation.
Eligibility, scope, exemptions, because the levy have an effect on Employers, Expatriates, scope of industries lined, period, are properly spelt out in chapter 3 of the handbook. Eligibility varies relying on components like business, expatriates’ position, period and keep or employment in Nigeria. All non-citizen or non-resident expatriates that occupy Quota positions or engaged via Short-term work permits fall below EEL. Employers of expatriates lined by the EEL are required to pay $15,000 for Administrators and $10,000 for different classes of expatriates. All employees of Diplomatic Missions, authorities officers and worldwide companies accredited to Nigeria in addition to dependents of all classes of expatriates in Nigeria are exempted from the fee of EEL. Penalties for numerous infractions are additionally offered.
On the Launch, the President Bola Ahmed Tinubu emphasised that, the scheme shouldn’t be used to impede International Direct Funding (FDI). Although related levy is imposed in Saudi Arabia, Singapore and Malaysia., as anticipated, there have been reactions from stakeholders on the introduction of EEL starting from Authorized perspective, appropriateness of the timing, possible fallout, responses from overseas buyers and impression on authorities revenues.
Authorized Concern and Contradictions
Whereas Some commentators opined that the levy lacks acceptable authorized framework; in that it was not legislated upon by the Nationwide Meeting earlier than its implementation, most commentators in help argued that the Minister depends on part 112(1) of the immigration Act 2015, which supplies inter alia ‘the Minister might make rules as in his opinion which can be essential or expedient for giving full impact to the provisions of this Act and Administration due to this fact. 112(2) states ‘with out limiting the generality of the supply of sub-section (1) of the part, the regulation could also be made for all or any of the next functions (a) for the management of immigrants in Nigeria’….. (d) for some other matter lined by the provisions of this Act. Moreover, in response to the Minister, the Levy was authorised by Federal Govt Council (FEC) on seventeenth of Might 2023.
At a time, the Authorities promised to scale back a number of taxes and levies to manageable quantity and really reveals dedication on this course by inaugurating Mr. Taiwo Oyedele’s Presidential Committee on Fiscal Coverage Tax Reform, some marvel if introduction of EEL shouldn’t be a discordant tune from the identical authorities. Did the committee on fiscal coverage had any enter into the EEL?
To some stakeholders EEL is one other observable contradiction in authorities insurance policies. There may be large condemnation of issuance of payments payable in Nigeria in USD. Its unanimously agreed that to ease strain on Naira, CBN and different regulatory Companies ought to implement fee of payments in Naira. Until Authorities supplies readability that EEL can be paid in equal of Naira because the case with Mixed Expatriate Residence Allow and Alien Card (CERPAC), the levy will put strain on Naira. Some operators argued that quoting EEL in USD somewhat than Naira reveals authorities insecurity in Naira.
Possible fall out
The efficient date of implementation of the EEL has been outlined as fifteenth March 2024 and employers have till fifteenth April 2024 to conform. Some operators posit that employers of expatriates should instantly supply for wanted foreign exchange or naira equal; which is able to make nonsense of their monetary plans with large impression on their money movement. To them, most firms are struggling to outlive the impression of excessive inflation, challenges in souring wanted foreign exchange, electrical energy provide, unsold inventory ensuing from low buying energy, introducing EEL now in pointless extra burden. The timeframe for compliance is just too brief. For Occasion, Saudi Arabia’s expatriate levy was launched in 2018 along with a collection of different rules geared toward creating jobs for Saudis and transferring the financial system away from oil dependency. The levy was SAR 3,600 ($962) per expatriate worker for 2018, SAR 6,000 ($1,604) for 2019, and SAR 8,400 ($2,245) for 2020, payable by the employer. It was graduated over time, giving the affected Employers alternative to plan.
Regardless of anticipated advantages, introduction of EEL will certainly have exceptional impression on a lot wanted FDI. We’re banking on FDI for required foreign exchange to stem free fall of Naira. Realistically, choice to put money into a rustic goes past alternative to repatriate capital Invested. Assured repatriation of capital and dividend shouldn’t be sufficient, each Investor wish to shield his funding, a technique of guaranteeing such is inserting his ‘personal individuals’ in key Managerial and operational positions. The argument that Nigeria is a giant market that the majority discerning buyers can not ignore is legitimate nonetheless, as at date, apart those who have moved manufacturing course of out, there are a number of firms working in Nigeria, which have moved their Managerial and operational management to Neighboring nations. Some would possibly select to undertake this mannequin. In most different nations the place EEL is imposed, they aren’t in dire want of FDI in comparison with Nigeria; Malaysia, Saudi Arabia and Singapore are internet exporters of merchandise, all have optimistic stability of fee, sturdy native currencies and environment friendly infrastructure.
Based mostly on the premise that EEL can be allowable bills, firms will expertise discount of their reported internet income and invariably Firm Revenue Tax (CIT) payable. The sensible implication is that whereas there can be enhance in income accruable to Authorities from EEL, CIT will by extension drop. Some states’ IGR rely closely on PAYE and chunk of that comes from taxes on earnings of Expatriates resident of their state. In state of affairs the place the variety of expatriates reduces on account of EEL, there isn’t a assurance that this discount will result in enhance in variety of Nigerians employed; fall in some states’ IGR is imminent.
Conclusion
There are extant legislations that adequately shield Nigeria employment area for Nigerians, what matter most is efficient enforcement. Any effort of Authorities to scale back unemployment, put the Nigerian Financial system within the palms of Nigerians have to be supported absolutely. Nevertheless, coverage on this course have to be correctly evaluated in order to not have unintended destructive impact publish implementation. The lengthy overdue elimination of subsidy on petroleum merchandise and unification of foreign exchange trade charges come to thoughts. Even supposing these are essential and laudable insurance policies, Authorities has been with confronted herculean activity managing the fallout.
Based on the Minister, the EEL mission was authorised by the Federal Govt Council on Might 17, 2023 that means it was the final administration that authorised the mission. Whereas one agrees that authorities is a continuum, this administration has had course to revisit, amended or in some cases reversed a number of of quick previous administration’s insurance policies and selections. It is not going to be misplaced however in truth extremely commendable if EEL is reviewed holistically within the gentle of daunting realities that the present administration is confronted with. In doing so, we will draw helpful classes from different nations the place such levy is operational; implementation time-frame, calculation of levy payable based mostly on a number of variable components, established thresholds earlier than levy turns into relevant, exemption of some sectors and citation in native forex with USD equal.
Alli, is a former Chairman Oyo State Board of Inner Income
