By Sufuyan Ojeifo
Whereas needs attract investments, a 2019 National Bureau of Statistics(NBS) report showed that the natural resources and the economic opportunities in Nigeria have continued to attract Foreign Direct Investments (FDIs) by investors across the world, which culminated in $19.07 billion capital inflow to Nigeria in 2018 of which $7.78 billion represented FDIs while capital inflows from January to May 2019 amounted to $14.2 billion of which $2.87 billion represented FDIs.
Credible feelers indicate that Nigeria is working on some measures to improve nationalization levels and get foreign companies to employ more Nigerian nationals. This will overtime help to balance employment opportunities between Nigerians and expatriates (expats) in foreign companies operating in the country. The Federal Ministry of Labour and Employment, with the National Directorate of Employment (NDE) and relevant Ministries,
Departments and Agencies, according to feelers, plan to create 20 million job opportunities which will be attractive to Nigerians by 2025. This forecast employment figure can largely be actualized and driven by the proposed revenue outcome of certain measures being worked out by the Ministry of Interior and the Nigeria immigration Service (NIS).
Specifically, the measures being fine-tuned are expected to generate higher employment for Nigerian nationals in the private sector by closing the wage gap (cost of labour) between the expatriates and the Nigerian labour force, making it more attractive to hire Nigerians. Although Nigerian nationals constitute only 59 per cent of total jobs in Nigeria, their wages account for less than 45 per cent of total wages. The main reason for this is the wide wage gap.
According to NBS, the average basic salary of expatriates stands at more than 45 per cent above the basic salary. Furthermore, the wage gap between expatriate and Nigerian employees is projected to remain, even after the rollout of measures being finetuned must have happened. By 2024, it is expected that the average salary of expatriates will amount to less than 45% above their basic salary annually. This is projected, on average, to increase the earnings of Nigerian nationals and bridge the wage gap to less than 20% between expatriates and nationals. This is expected to bring significant changes in all sectors of the economy and trigger higher nationalization driven by profitability impact.
As earlier stated, the Ministry of Interior and the Nigeria immigration Service will play significant roles in the measures being finetuned to balance out employment opportunities between Nigerian nationals and expatriates in the country. The Ministry of Interior will be responsible, among others, for providing complete data on quota issued to all companies and will also be responsible for authorizing Nigeria Immigration Service (NIS) to provide the data on quota utilization of the companies to ascertain the numbers of expatriates working in Nigeria. The NIS, under the direct supervision of the Ministry of Interior, is responsible, among others, for issuing all Nigerian travel documents, including the biometric visa; the issuance of residence permits to foreigners in Nigeria; border surveillance and patrol; and, enforcement of laws and regulations.
The NIS, according to feelers, will, under the emerging arrangements, provide complete data on expatriates working in Nigeria. Since the arrangements would largely run on Public-Private Partnership, the private component of the project will provide the details of the required data. The details will include, but not limited to, information on companies with expatriate quotas, the status of occupied quotas, individuals occupying those quotas with their dates of entry in Nigeria, last renewal dates and next renewal due dates. The PPP synergy will ensure that NIS shares the data of all incoming and outgoing expatriates with a new visa and assists with enforcement to ensure compliance.
Revenues from foreign investment in Nigeria have been payments made to the NIS, and taxes remitted to the Federal Inland Revenue Services (FIRS). However, while the law provides for payment of taxes such as the Personal Income Tax Act (PITA) cap P8 LFN, 2007, as amended, which forms the legal basis for taxation of employment income, including those earned by expatriates working in Nigeria, there is no existing legal framework for the new revenue source that the measures in the works target. However, the narrative is expected to change soon as a new regulatory framework would be unfolded to provide legal and regulatory context.
The Ministry of Interior and the NIS will honcho the legal and regulatory aspect of the significant measures. In fact, the principal law governing expatriate employment in Nigeria is the Nigeria Immigration Act, 2015 and the Immigration Regulation, 2017. Any foreigner who intends to work in Nigeria must obtain the consent of the Comptroller General of immigration. This consent is obtained in the form of an expatriate quota by the company or organization, which permits them to employ expatriates to specifically approved jobs and for a specific period with a view to training Nigerians under them and transferring these requisite skills during their period of employment as provided under Section 8 of the Immigration Act.
The objective of the expatriate quota is to avoid the indiscriminate employment of expatriates in situations where qualified Nigerians can fit into those positions. Expatriate quota is granted for an initial period of three years, renewable for two years subject to a total life span of seven years, within which such relevant skills ought to have been transferred to qualified Nigerians who were under-studying such expatriates. The new measures in the works will ensure this is done or else there will be sanctions and enforcement of the same. This will go a long way to stem the tide of brain drain or talents moving out of the country.
The measures to bring in expatiates into the revenue-generating net are very strategic towards raising funds to build or bolster the nation’s infrastructure stock and bridge the gap or deficit. The measures will cover a number of categories of visa and entry permits for expatriates to live and work in Nigeria, including Temporary Work Permit (TWP), Subject to Regularization (STR) Visa, and the Combined Expatriate Residence Permit and Alien Card (CERPAC). Instructively, the expatriate quota is required for companies seeking to employ expatriates, while CERPAC requires the expatriate to lawfully reside and work in Nigeria.
Significantly, an expatriate who has been granted an STR visa or issued a CERPAC is deemed a tax resident in Nigeria. Such expatiates are liable to tax in Nigeria irrespective of the length of their stay. The income of such expatriate is liable to tax in Nigeria whether such income was received in Nigeria or not. In other words, any portion of the income of such expatriate paid into a bank account (or through any other means) outside Nigeria is liable to tax in Nigeria. However, foreigners entering Nigeria on TWP may not be liable to tax if certain conditions are jointly met.
Various agencies have collaborated to synchronize taxpayer data in line with Nigeria’s efforts to curb tax evasion. The state tax authorities have strengthened collaboration with the NIS to facilitate access to immigration records/ information on expatriates employed by Nigerian companies to verify information received by taxpayers during their periodic tax audit and verification exercises.
It is important for employers of expatriates to properly track the entry and exit of the expatriates on their expatriates quota in and out of Nigeria by making sure details of the expatriates (location, duration of stay, etc.) are properly set out in the relevant returns and expatriate quota deletions upon completion of the expatriate’s assignment in Nigeria. In addition, the need for appropriate record-keeping of all documents relating to his assignments, such as contracts/assignment letters, immigration documents, travel trackers, and pay slips, cannot be overemphasized.
Remuneration of expatriates should be included in the base for the computation of remittance to be made by organisations for social security contributions, such as Nigeria Social Insurance Trust Fund (NSITF) and Industrial Training Funds (ITF). However, the Nigeria Pension Reform Act and other employee-related regulations do not specifically apply to foreign employees in Nigeria. Expatriates may enjoy the applicable tax reliefs where voluntary pension contributions are made to an approved Pension Fund Administrator (PFA) in Nigeria. However, where pension contributions are made to a PFA outside Nigeria, such contributions may not be allowed as tax relief but are subjected to tax.
Indeed, the bottom-line of measures being taken to balance employment opportunities between Nigerian nationals and expatriates or where there is sanctionable non -compliance with the terms of the expatriates quota in the engagement of Nigerians is to generate revenue for infrastructure development in line with the present government’s focused mandate to ministries, departments and agencies on Internally-Generated Revenue (IGR).
Ojeifo, journalist and mediapreneur, is based in Abuja and can be reached via email@example.com