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    HomeGovernance, Policy & Regulations ForumNigeria Wants Foreign Workers to Pay up to $15,000 Expat Levy. Is...

    Nigeria Wants Foreign Workers to Pay up to $15,000 Expat Levy. Is the Tech Industry Ready for It?

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    In a move that has stirred both debate and concern, the Federal Government of Nigeria has implemented the Expatriate Employment Levy (EEL) on February 27, 2024. This mandatory contribution is aimed at regulating the employment of foreign workers within the country, with a focus on balancing the benefits of expatriate employment and safeguarding local labor markets and resources.

    Scope and Eligibility

    The EEL applies to private sector operators utilizing foreign workers or relying on expatriate labor. It encompasses expatriate workers in quota positions, those on temporary work permits, or individuals staying or working in Nigeria for 183 days or more within a year. Notably exempted from this levy are accredited staff of Diplomatic Missions, government officials, international agencies, and their dependents unless they are engaged in employment within Nigeria.

    Rates and Compliance

    The levy is payable annually with rates set at USD 15,000 for Directors and USD 10,000 for other categories. Employers are mandated to pay by the last day of February the following year through an online portal, and the payment receipt is a prerequisite for the issuance or renewal of work or residence permits.

    Employers must maintain comprehensive records and report expatriate employment details or changes, complying with filing deadlines. The Nigeria Immigration Service (NIS) is tasked with verifying information and documents submitted by expatriates and employers. Failure to comply with EEL regulations carries penalties as high as NGN3,000,000, imprisonment, or revocation of work permits.

    Impact on Tech Industry and Business Landscape

    While the EEL may incentivize employers to invest in local talent development, concerns are rising about its potential adverse effects. The increased cost of doing business, reduced Foreign Direct Investments (FDI), and uncertainties surrounding the employment of a diverse workforce, including skilled foreigners, are being scrutinized.

    The requirement to pay the levy in foreign exchange is particularly troubling, placing additional pressure on the already devalued Naira. This contradicts the recent fiscal policies permitting the payment of taxes on foreign currency-denominated transactions in Naira for Nigerian businesses.

    Unanswered Questions and Recommendations

    Several grey areas in the implementation of the EEL have been identified. Ambiguities exist around the start date for counting the 30 days for registration or filing of EELs, and there’s a lack of clarity on how the program applies to expatriates already in the country.

    The unintended consequences, such as the reduction in earning power for individuals and the potential decline in business activities impacting tax revenues for state and federal governments, raise concerns. A more holistic approach is recommended for reviewing the framework of the EEL, particularly focusing on its timing and potential impact on various sectors, including the burgeoning tech industry.

    As the EEL takes effect, the business community, alongside relevant government bodies, must engage in a collaborative effort to address these concerns and ensure a balanced approach that promotes both economic growth and local talent development. The implementation of the program should be accompanied by a thorough review and refinement to mitigate potential adverse effects on the Nigerian economy and its tech industry.

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