An Overview Of The Expatriate Employment Levy In Nigeria – Contract of Employment

EXPATRIATE EMPLOYMENT LEVY

About the EEL

The EEL is a government-mandated financial contribution that is
imposed on employers in Nigeria who hire expatriate workers. The
levy aims to address socio-economic considerations by striking a
balance between economic growth, social equity, and workforce
development within the country. The EEL project, proposed and
managed by the NIS/Ministry for Internal Affairs, approved by the
Federal Executive Council on May 17, 2023. It mandates employers to
pay a levy for hiring expatriates, to foster the development of the
local workforce and reduce dependence on foreign expertise.

Scope

The EEL applies to all employers in Nigeria in various sectors
including construction, ICT, Agriculture, Oil & Gas,
Telecommunication, Banking and Finance, Maritime and Shipping, and
Healthcare who employ expatriates.

The EEL applies to expatriates who have been employed for a
cumulative period of at least 183 days within a fiscal year. This
includes those on temporary work permits engaged in seasonal or
short-term employment across different companies within Nigeria.
The responsibility for paying the EEL rests with the employer.

Expatriate workers are defined in the Handbook as non-citizen or
non-resident employees who occupy Expatriate Quota positions (i.e.
an approval by the Ministry to employ expatriates for specified
roles) or are engaged on a Temporary Work Permit, a single-entry
visa that is valid for sixty days (2 months) and may be extended in
the country for another thirty days (1 month). A TWP is issued to
applicants who intend to provide specialized services in Nigeria.
These employees must be employed for a cumulative 183 days from the
date of entry into Nigeria for such employment/engagement to be
covered by the EEL. Therefore, short-term employment may be
exempted from the EEL.

The Handbook outlines the specific circumstances under which the
EEL is applicable. While it does not directly state that companies
must pay the EEL for expatriate workers employed before the launch
date, it imposes a penalty for failing to register expatriates
within 30 days. This implies that registration is necessary for
current expatriate employees. This is further confirmed by the
notice issued jointly by the Ministry of Interior and the Nigerian
Immigration Service (“NIS”) specifies a 30-day
registration period, aligning with the Handbook’s
provisions.

Levy

All companies in Nigeria who employ expatriates are required to
pay the EEL. Employers of expatriates must pay the annual EEL of
USD15,000 for each director in the organisation and USD10,000 for
other categories of expatriates who are employed and stay in
Nigeria for a cumulative period of 183 days or more within a fiscal
year.

Exemptions

The EEL payment does not apply to all accredited staff of
diplomatic missions and government officials. It also does not
apply to expatriates under short-term employment i.e less than 183
days in one fiscal year.

Responsibilities

The Handbook details the responsibilities of the government,
employers, and expatriates. The government and its agencies will be
responsible for providing the online portal for facilitating the
payment of the levy, the enforcement of the EEL and it may carry
out audits and crosscheck the information provided by the
employer.

The employers are required to maintain accurate records, timely
reporting of expatriates’ information and any changes and meet
up with the deadlines for payment. Employers may also consider
in-house training for their employees in Human Resources and
payroll. The expatriate employees must ensure that they provide
accurate information to employers and the government to assist the
employers in fulfilling their obligations.

Enforcement

The NIS is the primary government agency that is responsible for
the implementation and enforcement of the EEL. The NIS has the
responsibility for the following:

• Determining those expatriates who are covered by the EEL.




• Enforce the payment of the EEL in line with the Immigration Act
  2015 and other applicable laws and regulations.




• Use the data generated from the EEL project for the enhancement
  of national security and economic development.

The EEL was expected to be in force from 15 March 2024. However,
on 8 March 2024, the Federal Government announced a suspension of
the proposed policy implementation subject to further engagements
with stakeholders.

Penalties/Sanctions

By virtue of Section 56 (5) of the Immigration Act, 2015, any
person (individual or corporate entity) who makes or causes to be
made to an immigration officer, any return, statement, or
representation which he knows to be false or does not believe to be
true shall be liable to imprisonment for a term of five years or a
fine of N1,000,000 or both.

The Handbook provides for the following sanctions and penalties
as outlined in Regulation 52(6) of the Immigration Regulations,
2017:

• Failure to file the application for EEL within 30 days attracts
  a fine of Three Million Naira (N3,000,000).




• Failure to register new employees within 30 days attracts a
  fine of Three Million Naira (N3,000,000).




• Falsification of information on EEL application attracts a fine
  of Three Million Naira (N3,000,000).




• Failure to renew EEL (registration/approval of particular
  expatriate or director(?) within 30 days attracts a fine of Three
  Million Naira (N3,000,000).

Conclusion

The introduction of the EEL is seen as a potential incentive for
employers to invest in local talent development. Although the
implementation has been temporarily suspended for more stakeholder
engagement following employers outcry, it signals the current
government’s intention to control and manage the engagement of
expatriates in view of the general public perception of the
displacement of local workforce through the abuse of the expatriate
work permit system. Employers are advised to take note of this new
policy and review their employment policies and manpower
requirements during the period of the suspension with a view to
positioning for compliance when implementation kicks off. Our view
is that considering the prevalence of the abuse of the expatriate
quota system and the considerable resources the NIS has expended on
the EEL (program), implementation is a matter of when, not if.

There are admittedly some grey areas in the implementation of
the EEL such as whether the payment is due when the expatriate is
employed or after staying in Nigeria for 183 days. It is expected
that more details on the implementation will be released by the
Ministry of Interior and NIS in the coming days and weeks. In
addition, there are indications that there will be consultations
with stakeholders which should clarify some of the grey areas
before the EEL is implemented.

It is also important to note that the EEL also adds to the
employer’s expenses as employers currently bear costs related
to expatriate engagement, such as expatriate quota and visa fees.
Employers also have the responsibility of maintaining comprehensive
records of expatriate employees. They are to provide updated
information to government agencies within specified timeframes,
promptly notify the government agencies of any changes in
expatriate employment circumstances and provide adequate trainings
to HR and Payroll teams to ensure they are adequately informed
about the EEL reporting requirements and compliance measures.

Further updates will be provided as the government continues
with stakeholder engagements, possibly revising the regulation and
reviewing its implementation.

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.

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