December 22, 2020
Nigerian Government inaugurates task force on business permit and expatriate quota violations
On 1 December 2020, Nigeria’s Honorable Minister of the Federal Ministry of Interior (FMI) – Ogbeni Rauf Aregbesola, inaugurated a nine-person Special Ministerial Task Force (SMTF) to monitor and enforce Business Permit (BP) and Expatriate Quota (EQ) administration in Nigeria.
Following its establishment, the SMTF has been mandated to carry out the following tasks within six months:
Background – Expatriate Quota (EQ) Administration in Nigeria
The EQ policy seeks to promote Foreign Direct Investment into Nigeria and facilitate the employment of highly-skilled individuals in specialized domains where there is a shortage of local talent. The policy is designed to promote the transfer of knowledge and technology, as well as encourage the development of qualified Nigerians through the understudy program.
Accordingly, companies that require the services of foreign nationals for long-term employment must apply for EQ approval from the FMI, to facilitate the deployment of the required foreign resources to Nigeria.
Upon obtaining the FMI’s approval for the required EQ slots, companies are required to meet the under listed conditions, in line with the stipulations of the Nigeria Immigration Act 2015 and the Immigration Regulations 2017:
Violation of the EQ policy by companies in Nigeria
The EQ administration has been contentious with respect to the transfer of talent to Nigerians, as there have been numerous reports of non-compliance with the EQ policy on the part of some companies.
Some of the recurrent instances of violation include:
Accordingly, there has been a level of mistrust by the FMI in granting EQ approvals due to the low level of compliance by stakeholders. Therefore, greater scrutiny is placed by the FMI in the review of all EQ-related applications and in many cases, very limited EQ slots are eventually approved on discretionary basis.
The above-mentioned instances have necessitated the establishment of the SMTF by the Government, with the overall objective of re-building trust in the system and promoting the effective implementation of the EQ policy.
Sanctions for non-compliance
The Government has put in place various sanctions for violations of the EQ policy as well as other immigration related obligations. These sanctions are imposed against defaulting companies and or individuals as the case maybe.
Attendant sanctions for non-compliance with the EQ policy with reference to the Immigration Act 2015 and regulations 2017 include:
a. Failure to employ Nigerian understudies – NGN3 million for each month without an understudy and deportation of the expatriate occupying the EQ position.
b. Failure to obtain the Minister’s approval for business set up by a foreign entity (i.e., Business Permit Issuance/amendment) – NGN1 million or deportation or both.
c. Failure to obtain Minister’s approval for employment of expatriates (i.e., EQ Approval) – NGN1 million or deportation or both.
d. Non-renewal of EQ/Non-submission of EQ returns (within the stipulated period) – NGN3 million on conviction.
e. Working on a business visa (without a residence permit on approved EQ) – NGN1 million on conviction or deportation or both.
f. Failure to initiate regularization within 90 days of arrival/Non-renewal of residence permit (within the 30 days window) – Imprisonment for a term of three years or a fine of NGN500,000 or both.
g. Obtaining fake residence permits for expatriate employees – Imprisonment for a term of five years or a fine of NGN1 million on conviction or both.
Though some of the abovementioned sanctions have not been fully implemented by the regulatory authorities in the past, it is expected that the new drive for compliance by the Government will bring about a more aggressive approach, especially in the coming months, based on the mandate of the SMTF.
Impact of SMTF
Upon successful conclusion of the SMTF’s mandate, the EQ system and its administration in Nigeria should become more effective, especially with respect to driving and tracking compliance. Furthermore, the Government anticipates that, through the effective implementation of its understudy program under the EQ policy, more employment opportunities will be created for qualified Nigerians.
In light of this development, all affected stakeholders, i.e., joint ventures, foreign-owned, as well as indigenous organizations that employ the services of expatriate assignees in Nigeria, should conduct a pre-audit review of its immigration-related documents in preparation for possible selection by the SMTF. This is very instructive as it is expected that relevant regulatory sanctions, which may include prosecutions and/or fines, may be imposed on organizations that are found to be non-compliant.
EY Nigeria’s People Advisory Services (PAS) Mobility Immigration team has experience in assisting organizations to carry out comprehensive pre-audit review of its relevant immigration documentation.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Nigeria, Lagos
Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York