The European Union has raised concern about the implementation of the Expatriate Employment Levy (EEL) recently announced by the Federal Government.
Although the government had suspended the implementation of the new levy following concerns raised by stakeholders, the EU said the manner with which the new policy came up would erode investors’ confidence in the system.
It also noted the low contribution of Value Added Tax to tax revenue in Nigeria, saying the VAT system put in place in the country was not working.
Head of Cooperation at the Delegation of the European Union to Nigeria, Massimo De Luca, stated this at the fourth session of the steering committee of the Support Programme for Fiscal Transition in West Africa (PATF) in Abuja.
PATF is geared toward improving management of domestic taxation and ensuring better coordination in ECOWAS and West African Economic and Monetary Union (WAEMU) regions.
On the $15,000 and $10,000 levy imposed by the Federal Government on companies employing expatriates, the official observed that firms all over the world desire a system predictable and fair to their investments.
“It’s a whole system that needs to be addressed. Companies here in Nigeria do complain of sudden changes in legislation. You know, for example, we saw last week what happened with the employment levy. All of a sudden, you have to pay $15,000 for a foreign employee. What companies are asking for, which is legitimate, are systems which are predictable and fair to their investments”, he stated.
De Luca, who lamented the low VAT rate in Nigeria, said even with growing inflation and increase in prices of goods in the country, there are sectors that could be made to pay a higher VAT rate.
Highlighting the need to enhance revenue collection capabilities among ECOWAS member countries in an effective, transparent, and predictable manner, De Luca also appealed to the Federal Government to ensure that taxes collected translated to meaningful progress in the country.
The official said the body was working to promote and strengthen tax governance mechanisms, fair taxation and global tax transparency to tackle tax fraud and evasion.
A tax expert and member of the PATF steering committee, Andrew Onyeanakwe, backed the call by the Federal Inland Revenue Service (FIRS) on the need to harmonise the Federal Government’s revenue collection system.
According to him, Nigeria needs a single revenue collection platform, as seen in other jurisdictions.
