By Abimbola Ogunnaike
The Nigeria Employers’ Consultative Association(NECA) has disclosed the main reason why it rejected the Federal Government expatriate employment levy.
According to NECA, the Ministry of Interior’s expatriate employment levy will deter investment in the country, just as it also faulted the levy, saying there would be a need for certain regulations to be put in place before such tax could be imposed.
The association, in a statement issued on Sunday,3 March, 2024, said that following the launch of the Expatriate Employment Handbook, an initiative of the Federal Ministry of Interior, purportedly aimed at enhancing skills transfer in Nigeria, the new levy would frustrate the Federal Government’s ongoing fiscal and monetary reforms if implemented.
The Director-General of NECA, Adewale-Smatt Oyerinde, said “It will also serve as a disincentive to Foreign Direct Investment among many other unintended negative consequences. The levy of between $10,000 to $15,000 on employers that employ expatriates, when Nigeria is actively seeking FDI, is not only exploitative and extortionist but also a contradiction that cannot be explained.”
“While we support the Federal Government’s objective of developing the local workforce, we have 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 organisations 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,” he added
While raising organised businesses’ concern on the legality and appropriateness of the levy, NECA DG said, “We are concerned at the legality and appropriateness of the Expatriate Employment Levy 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.”
According to him, the Ministry of Interior and indeed, 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 offends the Constitution and are illegal.”
The NECA chief also observed that “existing legislations, such as the Local Content Act and Immigration Act have already addressed objectives like 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,” he said.
Oyerinde noted that “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.”
As a result, he urged that the government seeks 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.
Oyerinde said the adoption of fiscal incentives to enhance investment attractiveness, support business stability, and prioritise measures that facilitate ease of doing business to attract both local and foreign investors.
He canvassed for 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 goals but stressed the need for strategies fostering a favorable investment climate without burdening businesses excessively. Collaboration between the private sector and Government is vital to finding fair solutions promoting economic interests and sustainable business growth.
