Expatriate Employment Levy: Matters Arising

Bicci Alli

On 27th February 2024, the federal government launched its Expatriates Employment Levy (EEL) Handbook. The levy is government mandated contributions imposed on employers who employ expatriate workers in Nigeria. The EEL seeks to balance economic growth, social equity and workforce development. In addition, the levy will ensure equilibrium of expatriate employment with the protection of Nigeria’s local labour markets and resources.

As specified in the Handbook, laudable and commendable objectives of the EEL include but not limited to promote skill transfer and knowledge sharing, balance economic growth and social welfare, enhance collaboration between Public and Private sector and address demographic shifts.  EEL card is a mandatory document like passport, and will be required at the time of lawful exit and entry into the country.

Eligibility, scope, exemptions, as the levy affect Employers, Expatriates, scope of industries covered, duration, are well spelt out in chapter 3 of the handbook.  Eligibility varies depending on factors like industry, expatriates’ role, duration and stay or employment in Nigeria.  All non-citizen or non-resident expatriates that occupy Quota positions or engaged by means of Temporary work permits fall under EEL. Employers of expatriates covered by the EEL are required to pay $15,000 for Directors and $10,000 for other categories of expatriates.  All staff of Diplomatic Missions, government officials and international agencies accredited to Nigeria as well as dependents of all categories of expatriates in Nigeria are exempted from the payment of EEL.  Penalties for various infractions are also provided.

At the Launch, the President Bola Ahmed Tinubu emphasised that, the scheme should not be used to impede Foreign Direct Investment (FDI).  Though similar levy is imposed in Saudi Arabia, Singapore and Malaysia., as expected, there have been reactions from interested stakeholders on the introduction of EEL ranging from Legal perspective, appropriateness of the timing, likely fallout, responses from foreign investors and impact on government revenues.

Legal Issue and Contradictions

While Some commentators opined that the levy lacks appropriate legal framework; in that it was not legislated upon by the National Assembly before its implementation, most commentators in support argued that the Minister relies on section 112(1) of the immigration Act 2015, which provides inter alia ‘the Minister may make regulations as in his opinion that are necessary or expedient for giving full effect to the provisions of this Act and Administration therefore. 112(2) states ‘without limiting the generality of the provision of sub-section (1) of the section, the regulation may be made for all or any of the following purposes (a) for the control of immigrants in Nigeria’….. (d) for any other matter covered by the provisions of this Act. Furthermore, according to the Minister, the Levy was approved by Federal Executive Council (FEC) on 17th of May 2023.

At a time, the Government promised to reduce multiple taxes and levies to manageable number and actually shows commitment in this direction by inaugurating Mr. Taiwo Oyedele’s Presidential Committee on Fiscal Policy Tax Reform, some wonder if introduction of EEL is not a discordant tune from the same government. Did the committee on fiscal policy had any input into the EEL? 

To some stakeholders EEL is another observable contradiction in government policies. There is wide condemnation of issuance of bills payable in Nigeria in USD. Its unanimously agreed that to ease pressure on Naira, CBN and other regulatory Agencies should enforce payment of bills in Naira. Unless Government provides clarity that EEL will be paid in equivalent of Naira as the case with Combined Expatriate Residence Permit and Alien Card  (CERPAC), the levy will put pressure on Naira. Some operators argued that quoting EEL in USD rather than Naira shows government lack of confidence in Naira. 

Likely fall out 

The effective date of implementation of the EEL has been defined as 15th March 2024 and employers have until 15th April 2024 to comply.  Some operators posit that employers of expatriates must immediately source for needed forex or naira equivalent; which will make nonsense of their financial plans with huge impact on their cash flow. To them, most companies are struggling to survive the impact of high inflation, challenges in souring needed forex, electricity supply, unsold stock resulting from low purchasing power, introducing EEL now in unnecessary additional burden.  The time frame for compliance is too short.  For Instance, Saudi Arabia’s expatriate levy was introduced in 2018 in conjunction with a series of other regulations aimed at creating jobs for Saudis and moving the economy away from oil dependency. The levy was SAR 3,600 ($962) per expatriate employee for 2018, SAR 6,000 ($1,604) for 2019, and SAR 8,400 ($2,245) for 2020, payable by the employer. It was graduated over the years, giving the affected Employers opportunity to plan.

Despite expected benefits, introduction of EEL will surely have remarkable impact on much needed FDI.  We are banking on FDI for required forex to stem free fall of Naira.  Realistically, decision to invest in a country goes beyond opportunity to repatriate capital Invested. Guaranteed repatriation of capital and dividend is not enough, every Investor would like to protect his investment, one way of ensuring such is placing his ‘own people’ in key Managerial and operational positions.  The argument that Nigeria is a big market that most discerning investors cannot ignore is valid however, as at date, aside those that have moved production process out, there are several companies operating in Nigeria, that have moved their Managerial and operational control to Neighboring countries. Some might choose to adopt this model.  In most other countries where EEL is imposed, they are not in dire need of FDI compared to Nigeria; Malaysia, Saudi Arabia and Singapore are net exporters of products, all have positive balance of payment, strong local currencies and efficient infrastructure. 

Based on the premise that EEL will be allowable expenses, companies will experience reduction in their reported net revenue and invariably Company Income Tax (CIT) payable.  The practical implication is that while there will be increase in revenue accruable to Government from EEL, CIT will by extension drop. Some states’ IGR depend heavily on PAYE and chunk of that comes from taxes on income of Expatriates resident in their state.  In situation where the number of expatriates reduces as a result of EEL, there is no assurance that this reduction will lead to increase in number of Nigerians employed; fall in some states’ IGR is imminent. 


There are extant legislations that adequately protect Nigeria employment space for Nigerians, what matter most is effective enforcement.   Any effort of Government to reduce unemployment, put the Nigerian Economy in the hands of Nigerians must be supported fully.  However, policy in this direction must be properly evaluated so as not to have unintended negative effect post implementation. The long overdue removal of subsidy on petroleum products and unification of forex exchange rates come to mind.  Despite the fact that these are necessary and laudable policies, Government has been with faced herculean task managing the fallout.

According to the Minister, the EEL project was approved by the Federal Executive Council on May 17, 2023 meaning it was the last administration that approved the project. While one agrees that government is a continuum, this administration has had course to revisit, amended or in some instances reversed several of immediate past administration’s policies and decisions.  It will not be out of place but in fact highly commendable if EEL is reviewed holistically in the light of daunting realities that the current administration is faced with.  In doing so, we can draw useful lessons from other countries where such levy is operational; implementation time frame, calculation of levy payable based on several variable factors, established thresholds before levy becomes applicable, exemption of some sectors and quotation in local currency with USD equivalent. 

 Alli, is a former Chairman Oyo State Board of Internal Revenue

Related Articles