Nigeria has decided to pause a highly contentious annual levy that would necessitate businesses employing expatriates to pay hefty sums of $15,000 for directors and $10,000 for other workers.
President Bola Tinubu introduced this tax slightly over a week ago, sparking widespread condemnation and debate nationwide.
The Ministry of Interior announced the pause, citing the need for dialogue among stakeholders after a meeting to discuss the levy in Abuja last Friday. As stated by the Ministry of Interior, the initial rationale behind the tax was to deter abuse of the expatriate quota system while simultaneously fostering employment opportunities for Nigerians and narrowing wage gaps between expatriates and local workers.
The decision to pause the Expatriate Employment Levy (EEL) was welcomed by various quarters, including Dele Kelvin Oye, the national president of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA).
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Oye commended the government’s consideration of the potential impact the levy could have on Nigeria’s business landscape, hailing it as indicative of their commitment to creating an environment conducive to both local and international investment.
However, the imposition of the EEL faced significant opposition from many organizations, with concerns raised about its implications amid Nigeria’s ongoing economic challenges. The Nigeria Employers’ Consultative Association (NECA) described the policy as “worrisome,” expressing fears that it could exacerbate unemployment and lead to dire socio-economic consequences.
Similarly, the Manufacturers Association of Nigeria (MAN) criticized the levy as “punitive”. It warned that it could deter foreign investment, thus undermining Nigeria’s aspirations to be seen as an attractive global investment destination.
Nigeria hosts over 150,000 expatriates, primarily working in the oil and gas, construction, telecommunications, and hospitality sectors. With its significant oil production, Nigeria relies heavily on oil and gas exports, accounting for most of its foreign exchange earnings. Currently, companies in Nigeria are required to pay $2,000 annually to obtain a residency permit for each foreign employee.
Acknowledging the challenges faced by Nigerians, particularly amidst rising food prices, transportation costs, and inflation fueled by the depreciation of the naira, President Tinubu emphasized ongoing efforts to stabilize the economy and improve the country’s financial outlook.
