Expatriate levy: FDI to Face Fresh Impediment

By Stephen Asaba-ase

Trying period in Nigeria with the economy on its knees and wobbling to almost a dying state, and a currency whose value is almost the same as the paper that it is printed.

According to a reliable source on 7th March 2024, the managers of the economy, led by President Bola Tinubu, are running helter-skelter to revive the situation and prevent further socio-economic contradictions and trying to proffer a cocktail solutions.

One such measure is the fresh imposition of a mandatory annual levy for organisations employing expatriate workers. It requires them to pay $15,000 for a director and $10,000 for other employees from the previous $2,000 a year to obtain a residency permit for each international labour.

According to the Federal Government, the commission is meant to rally international companies to employ more local workers and improve revenue.

However, the President warned that the levy should not be used to discomfort potential investors, counter offers are that the exact opposite may be utilized.

“The levy, which will be implemented by the Nigeria Immigration Service, applies to workers who laboured for at least 183 days in a year within Nigeria.

“The EEL penalize jail terms up to three and five years for neglecting individuals and corporate firms to not conform, including failure to provide accurate information.

“As it is denominated in dollar, the EEL looks promising. But this can only have a short-term benefits to an economy battling to reduce its multiple taxation strangulation.

“As imagined, key stakeholders have strongly adviced against the tax. The Nigeria Employers’ Consultative Association warned that it would deter investment in the country, adding that there would be a need for certain restrictions must be put in place before tax such kind could be levied.

NECA also said that the idea if supposedly aimed at strengthening skills transplantment in Nigeria, but it would frustrate the Federal Government’s ongoing fiscal and monetary reforms if implemented.

“Undoubtedly, the levy will serve as a counter incentive to Foreign Direct Investment at a time the country is actively seeking FDI. FDI into Nigeria pitch to -$198 million in 2022 from $3.31 billion in 2021.

“The initiative of the Ministry of Interior seemed not well thought because, it is coming at a time when companies are shutting down and leaving the country in droves, while those that manage to remain are confronted with massive reparation, which may increase the level of unemployment with dire socio-economic consequences.

We, therefore conform with the position of NECA that “the levy, if enforced, it will not only distort and frustrate the current efforts to reform the monetary space, but will contradict and render the President’s ongoing quest for Foreign Direct Investment ineffective, he said.

“Furthermore, a reciprocal implementation of the same policy by other countries will have serious consequences on the careers and growth of Nigerians who are expatriates in other countries.”

“Instead of imposing additional levies on foreign workers, the government should enhance extant regulatory parastatals in managing expatriate employment, improve the collective existing taxes, reduce wastage, and manage the cost of governance.

“The four-week timetable for the execution is too short for such a major policy shift, companies need to be given at least one year. It is only fair to do so, as this would be very devastating for their firms, plans, and projections.

“Unfortunately, Diaspora remittances to the country are already dwindling with the World Bank estimating that Diaspora remittances to Nigeria in 2023 totalled $20 billion, slightly lower than the $20.13 billion documented in 2022 and the over $21 billion before that.

“If other countries reciprocate what Nigeria is trying to do, remittances will suffer as Nigerian workers abroad will not be able to send money home like they used to do.

Therefore, Tinubu must reverse the counterproductive EEL, he added.