The Ministry of Interior’s expatriate employment fee is expected to discourage foreign investment in Nigeria, according to the Nigeria Employers’ Consultative Association.
The group also criticized the fee, claiming that before such a tax could be levied, certain laws would need to be implemented.
In a statement released on Sunday, NECA stated that the new tax, if it were to be implemented, would thwart the Federal Government’s ongoing fiscal and monetary reforms. This comes after the Federal Ministry of Interior launched the Expatriate Employment Handbook, an initiative ostensibly intended to improve skills transfer in Nigeria.
“It will also serve as a disincentive to Foreign Direct Investment among many other unintended negative consequences,” said Adewale-Smatt Oyerinde, the Director-General of NECA. Not only is the tax of $10,000 to $15,000 imposed on companies who hire foreign workers when Nigeria is actively pursuing Foreign Direct Investment (FDI) unfair and extortionate, but it also defies logic.
“While we applaud the goal of the federal government to train the local labour force, we have been leading the charge in advancing the development of technical skills, job creation, and skills transfer.
“However, the Ministry of Interior’s recently launched initiative has the potential to create more fundamental economic and socio-labor distortions,” he said.
“It is concerning that organizations who hire foreign workers are being forced to pay US$15,000 and US$10,000 at a time when enterprises are closing and fleeing the nation in large numbers. Numerous enterprises have recently experienced large losses, which might lead to a rise in unemployment and other serious socioeconomic repercussions.
Oyerinde said, “We are concerned at the legality and appropriateness of the Expatriate Employment Levy as well as its effect on the economy,” in response to organized companies’ concerns about the levy’s suitability and legality. The Federal Republic of Nigeria’s 1999 Constitution, the Immigration Act, and the Local Content Act, among other laws, are unambiguously enforceable against the contents of a handbook.
He asserts that without the proper law, neither the Ministry of Interior nor the government as a whole may impose a tax or charge.
For example, he said, “An Act of the National Assembly must support any imposition of tax, charge, fee, or levy under Section 59 of the Nigerian Constitution. Levies that are levied in violation of section 59 of the Constitution are unlawful and constitute an offence against the document.
The head of NECA also noted that “the field has already been covered by existing legislation, such as the Local Content Act and Immigration Act, which have already addressed objectives similar to those of the EEL Handbook.” Consequently, adding more taxes would be redundant and make it more difficult to conduct business in Nigeria.
According to Oyerinde, “the levy, if implemented, will contradict and render ineffective the President’s ongoing quest for Foreign Direct Investment, as well as distort and frustrate the ongoing efforts at clear reform of the Fiscal and Monetary space.” Moreover, the careers and advancement of Nigerian expatriates abroad would suffer greatly if other nations adopted the same attitude in return.
Consequently, he recommended that instead of enacting new taxes, the government strive to enhance the regulatory bodies already in place that oversee foreign employment. This would provide a more flexible and responsible regulatory environment for the application of current laws.
He emphasized the need to prioritize policies that make conducting business easier to draw in both domestic and international investors, as well as to embrace fiscal incentives to boost investment attractiveness and maintain business stability.
Oyerinde advocated for joint efforts between the public and commercial sectors to investigate other sources of funding and encourage the production of wealth via communication and stakeholder involvement.
While acknowledging the government’s objectives, Oyerinde emphasized the necessity for policies that promote a favourable investment environment without placing undue pressure on companies. Working together, the public and private sectors may achieve equitable outcomes that advance economic interests and long-term corporate expansion.
Credit: Allschoolabs, Myschoolgist
