A Federal High Court in Abuja on Thursday issued an ultimatum to the Minister of Interior, Dr. Olubunmi Tunji-Ojo, and the Attorney-General of the Federation (AGF), Mr. Lateef Fagbemi, SAN, to oppose a suit seeking to halt the Expatriate Employment Levy (EEL) introduced by the federal government.
Justice Inyang Ekwo directed the officials to appear before the court and show cause why the implementation of the expatriates’ taxation regime should not be permanently stopped.
This order followed an ex-parte motion filed by the Incorporated Trustees of New Kosol Welfare Initiative against the Interior Minister and AGF.
The group alleged that “the proposed taxation regime is an anti-people policy with radical effects on different aspects of the Nigerian economy, serving as a chokehold on the nation’s economic growth.”
Applicant’s Allegations
According to the plaintiff’s counsel, Paul Atayi, Section 59 of the 1999 Constitution forbids the executive arm of government from imposing taxes on corporate bodies and citizens without legislative approval.
- In an affidavit deposed to by the group’s Programme Implementation Coordinator, Raphael Ezeh, the Federal Government of Nigeria unveiled a proposed taxation policy called the Expatriate Employment Levy (EEL).
“According to KPMG and other online information analysts, the Federal Government intends to compel all companies and organisations engaging expatriates to pay EEL as follows:
“For every expatriate at the director level: $15,000 (N23 million at current exchange rates) per annum.
“For every expatriate at the non-director level: $10,000 (N16 million at current exchange rates) per annum,” the affidavit stated.
- The group claimed that the levy stipulates penalties for non-compliance, including five years’ imprisonment and/or N1 million for inaccurate or incomplete reporting while a corporate entity’s failure to file the EEL within 30 days would attract a penalty of N3 million.
- The plaintiff urged the court to declare that taxation is a sensitive matter requiring collaboration between the executive and legislative arms of government under the 1999 Constitution (as amended).
The News Agency of Nigeria quoted Atayi as saying that the existing tax regime is far more favorable to expatriates than the one proposed by the federal government.
“If the defendants are not restrained by this honourable court, they will commence full implementation of the said programme, thereby threatening the nation’s economic sustainability,” Atayi argued.
What transpired in court
- After hearing from the applicant, Justice Ekwo ordered the plaintiff to notify the defendants of the ex-parte application and orders within three days.
“Upon being served, the defendants are hereby ordered to show cause why the prayers of the plaintiff should not be granted on the next date of hearing,” Justice Ekwo ruled.
- The court adjourned the matter until January 16, 2025, for the Minister of Interior and the AGF to respond.
Backstory
Nairametrics previously reported that President Bola Tinubu inaugurated the Expatriate Employment Levy, an initiative of the Federal Ministry of Interior, in February 2024 at the State House Council Chambers, Abuja.
- The levy aims to bolster revenue generation, foster job creation for Nigerians in foreign-operated firms, and address the pay disparity between expatriates and local employees.
- The Minister of Interior, Dr. Olubunmi Tunji-Ojo, stated that the EEL would be implemented through a Public-Private Partnership (PPP) model, with the Nigeria Immigration Service (NIS) as the primary agency responsible for its execution.
- However, the Nigeria Employers’ Consultative Association (NECA), representing private-sector employers, raised concerns that the levy could undermine the Tinubu administration’s fiscal reforms.
In March 2024, the federal government temporarily paused the implementation of the Expatriate Employment Levy to allow for broader consultations with relevant stakeholders.
