Nigeria Imposes Additional Levy on Employers of Expatriate Workers


On 27th February 2024, the President of Nigeria, Bola Ahmed Tinubu, approved the implementation of an Expatriate Employment Levy Scheme (the “EEL Scheme”), designed to increase employment opportunities for Nigerians with companies operating in the country, balance employment opportunities between Nigerians and expatriates, close wage gaps between expatriates and the Nigerian labour force, improve nationalisation / indigenisation, facilitate knowledge transfer to grow the economy and generate revenue for the government.

To provide guidance on operation of the EEL Scheme, an Expatriate Employment Levy Handbook (the “EEL Handbook”), was published by the Ministry of Interior and endorsed by the President.

Things to note

  1. A private company or other private sector organisation in Nigeria that engages expatriate workers for a period equal to 183 days or more within a fiscal year, is required to pay an annual expatriate employment levy (the “levy”) to the Nigerian government in the sum of USD15,000 (for directors) and USD10,000 (for other expatriates i.e. non-directors).
  • Expatriate workers (impacted by the levy) are described as non-Nigerians that are employed to work in Nigeria, as well as those non-Nigerians that hold specific types of work permits, visa or other temporary residency arrangements.
  • The substantive sections of the EEL Handbook state that the levy is payable by the affected employer but a portion of Section 8 of the EEL handbook (titled ‘FAQs’) indicate that the levy is assessed “mostly on the off-shore earnings of expatriates working in Nigeria”. Another section requires employers to notify the relevant agencies of any changes in the employment of expatriates (e.g. job roles, salary, employment duration, etc.) as these may impact calculations of the levy. We expect this inconsistency to be addressed by the authorities in due course.
  • In Nigeria, a company that seeks to employ expatriates must apply for expatriate quota positions for the number of expatriate personnel it wishes to employ. If granted, the approval (referred to as an expatriate quota) will specify the maximum number of expatriates that the company can have. For each expatriate quota position, a fee is payable. This regime and fee remains in place, so as companies already pay a separate fee to the government for the expatriate quota positions, the levy is additional payment for the same purpose.
  • Offences under the policy include failure to file required information within 30 days, failure to register new employees within the stipulated period, submission of forged information and failure to renew (payment of) the EEL, which attract fines of N3,000,000 (three million Naira) each. Inaccurate or incomplete reporting is punishable by imprisonment for a term of 5 years or a fine of N1,000,000 (one million Naira) or both.

Our thoughts

  • The EEL Scheme purports to promote skill transfer and knowledge sharing, balance of economic growth and social welfare, enhance public / private sector collaboration and address demographic shifts but the EEL Handbook is very light on details of how the government intends to achieve these goals i.e. other than hoping that the levy will cause employers to reduce their number of expatriates. The statements from the presidency and Interior Minister also highlighted closure of the wage gap between expatriates and local workers as another potential benefit of the EEL Scheme but the EEL Handbook does not address this subject at all.
  • It appears that the levy is not payable per expatriate worker (subject to clarification from the Interior Ministry). If that is the case, it is doubtful whether payment of a total of USD25,000 (for directors and other expatriate positions), without more, will cause the government’s purported objectives to be met.  If it is clarified that the levy applies per position i.e. for each expatriate quota position, then it is more likely to cause employers of junior level expatriates to reconsider their expatriate quota utilisation. For instance, some contractors have been accused of bringing foreign nationals to carry on simple, unskilled or menial works (especially in the construction industry), so bearing an additional cost per junior expatriate worker could trigger the desired behavioural change.
  • The Interior Minister confirmed that this policy change is (also) a revenue generating measure. Rather than approving only the expatriate quota that meet strategically set criteria and, thereafter, monitor to ensure compliance, the Ministry of Interior seeks to cash in from companies that wish to continue to employ expatriates.
  • The Interior Ministry’s action is inconsistent with the Tinubu administration’s vow to remove bottlenecks to doing business in Nigeria because the EEL Scheme imposes additional financial and regulatory burden on businesses.

It is worth mentioning that this policy follows an earlier threat by the Interior Minister to withdraw visa-on-arrival privileges for countries that have not reciprocated Nigeria’s visa gesture.

The same Interior Ministry (under the previous administration) released revised guidelines in August 2022 that sought to increase the minimum share capital for companies with foreign shareholders from N10,000,000 (ten million Naira) to N100,000,000 (one hundred million Naira), thereby negatively impacting SMEs. Enforcement of the policy has been put on hold but could be revisited at any time – unless significant advocacy efforts are deployed.