The Nigeria Employers’ Consultative Association (NECA) has raised concerns over the recently launched Expatriate Employment Levy (EEL) by the Federal Government, warning that it would discourage investment in the economy.
The EEL handbook recently unveiled in Abuja is an initiative of the federal ministry of interior aimed at enhancing skills transfer in Nigeria and generating revenue for the Federal Government.
But NECA said that the levy, if implemented, would not only frustrate the Federal Government’s on-going fiscal and monetary reforms but also serve as a disincentive to foreign direct investment (FDI), among many other unintended negative consequences.
The levy of between $10,000 and $15,000 on employers that employ expatriates when Nigeria is actively seeking FDI is not only exploitative and extortionist, it is also a contradiction that cannot be explained,” Adewale-Smatt Oyerinde, the director-general of NECA said on Sunday.
Oyerinde said, “We absolutely 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 $15,000 and $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.”
Echoing the worries of the organised businesses on the legality and appropriateness of the levy, the DG stated, “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, 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 offends the Constitution and are illegal.”
The NECA boss also observed that “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”.
Articulating the potential impacts of the levy, if implemented, 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.”
Oyerinde acknowledged the government’s objectives but emphasised the importance of pursuing strategies that foster a conducive investment climate without imposing undue burdens on businesses.
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