Olubunmi Tunji-Ojo, the interior minister, and Lateef Fagbemi, the attorney general of the federation (AGF), have been called before a federal high court in Abuja regarding the expatriate employment levy (EEL).
On January 16, the ministers will go before the court to defend the continued implementation of the proposed taxing scheme for expats.
The sitting judge, Inyang Ekwo, rendered this decision on Thursday in response to a motion ex parte filed by plaintiff’s attorney Patrick Peter. Within three days following the ruling, Ekwo mandated that the motion be served to the minister and the AGF.
The Incorporated Trustees of New Kosol Welfare Initiative filed the lawsuit, which was designated FHC/ABJ/CD/1780/2024.
In order to prevent the defendants from implementing the new taxation system for foreigners in Nigeria until the motion is heard and decided, the group requested an order of temporary injunction.
Raphael Ezeh, the group’s coordinator for program execution, stated in the affidavit that is attached to the lawsuit that the federal government announced the EEL taxation policy on Tuesday, February 27, 2024.
“According to KPMG and other online information analysts and dissemination agencies, the Federal Government intends to compel all companies and organisations who engage the services of foreign expatriates to pay tax E.E.L. as follows:
“For every expatriate on the level of a director — Fifteen Thousand United States Dollars ($15,000.00) equivalent to Twenty-Three Million Naira, by the current exchange rates (NW23,000,000.00) per annum.
“For every expatriate on a non-director level – Ten Thousand United States Dollars ($10,000.00) equivalent to Sixteen Million Naira, by the current exchange rates (N16,000,000.00) per annum.”
The Federal Government also intended to implement new rules with fines and penalties for noncompliance with the proposed taxation system, Ezeh claimed.
Inaccurate or lacking reporting will result in five years in prison and/or N1 million, he said.
In addition to failing to register an employee within 30 days, he stated that a corporate entity will be fined N3 million for submitting incorrect information and failing to file an EEL within 30 days.
According to the coordinator, an organization faces a N3 million fine if it fails to renew its EEL before it expires.
He said, “The proposed taxation regime is totally an anti-people policy because of its radical effect on different aspects of the Nigerian economy and it works like a choke-hold against the economic growth of the nation.”
He pointed out that, in accordance with the 1999 Constitution (as amended), taxes is a delicate matter that calls for cooperation between the legislative and executive branches of government.
He emphasized that the executive branch by itself is not empowered to impose taxes on persons and corporate entities under section 59 of the constitution. In contrast to the proposed scheme, Ezeh stated that the current tax policy is “significantly more favourable to expatriates.”
He said, “If the defendants are not restrained by an order of this honourable court, they will commence full implementation of the said programme and thereby threatening the nation’s economic sustainability.”
To give the defendants time to come before the court and provide justification, the case was postponed until January 16.
The EEL’s implementation was halted by the federal ministry of interior in 2024 to give stakeholders, including the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), more time to consult.