Former Chairman, Oyo State Board of Internal Revenue, Mr Bicci Alli, has warned that despite its effects, the implementation of Expatriate Employment Levy (EEL) will impact on the much needed Foreign Direct Investment (FDI).
Particularly, he noted that the EEL will impact the nation’s banking on FDI to stem the free fall of the Naira.
The federal government had on February 27 launched the Expatriates Employment Levy (EEL) handbook with the levy being imposed on employers who employ expatriate workers in Nigeria, effective from March 15.
Specifically, employers of expatriates covered by the EEL are required to pay 15,000 USD for directors and 10,000 USD for other categories of expatriates.
ALSO READ: Nigeria to train more Customs officers against illegal wildlife trade
Speaking with Tribune Online, Alli noted that countries where EEL is imposed are those not in dire need of FDI as Nigeria; are net exporters of products, have positive balance of payment, strong local currencies and efficient infrastructure.
He called for a holistic review of the implementation of EEL in the light of daunting realities that the current administration is faced with.
Alli said the nation must draw inferences from countries where EEL was operational in terms of having a long 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.
Though he noted that the argument of the federal government that Nigeria was a big market that most discerning investors cannot ignore was valid, he, however, noted that aside from those that had moved production process out, there were several companies operating in Nigeria, that had moved their managerial and operational control to neighbouring countries.
Alli said: “Realistically, decision to invest in a country goes beyond the 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.
“Despite expected benefits, introduction of EEL will surely have a remarkable impact on much needed FDI. We are banking on FDI for required forex to stem free fall of naira.
“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 an increase in revenue accruable to the government from EEL, CIR will by extension drop.
“Some states’ IGR depend heavily on PAYE and a chunk of that comes from taxes on income of expatriates resident in their state.
“In a situation where the number of expatriates reduces as a result of EEL, there is no assurance that this reduction will lead to increase in the number of Nigerians employed; fall in some state’s IGR is imminent.
“There are extant legislations that adequately protect Nigeria employment space for Nigerians, what matters most is effective enforcement.
“Any effort of the government to reduce unemployment, puts 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 faced with 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, the administration has had course to revisit, amended or in some instances reverse several of the immediate past administration’s policies and decisions.”
and then