Expatriates Permits and Quotas: Compliance Obligations in Nigeria (Part 1)

The recruitment of expatriates by a Company, rather than hire locally, is usually undertaken for different reasons which may include:

1. The need for specialised labour and expertise.
2. Limited local talent pool which may result in high hire cost.
3. Transfer of technical know-how and training of local hires.
4. Facilitation of seamless collaboration of international offices with the local ones.
5. Shaping and conformity of the standards of the new local market to the home-based market.

The nature and technicality of a Company’s business and its operations may give rise to the need for its investors to require the services of expatriates, especially in the initial phases of such business in Nigeria, to ensure profitability of their investments.

This edition of the Digest briefly examines the compliance requirements of Companies that are desirous of recruiting expatriates into their Nigerian workforce to the Nigeria Immigration Service (NIS).

Business Permit and Expatriate Quota

The Immigration Act, 2015 (the “Act”) sets out the provisions for matters relating to immigration, passports, visas, resident permits, work permits, and the prohibition of smuggling of migrants into and from Nigeria.

The application for a Business Permit is the first step towards compliance with the regulatory process for employing expatriates and is usually made along with the application for Expatriate Quota and application lies to the Ministry of Interior

Section 36 of the Act provides that “no person other than a citizen of Nigeria shall accept employment (not being employed with the Federal Government or a State Government) without the consent in writing of the Director of Immigration; or on his own account or in partnership with any other person, practice a profession or establish or take over any trade or business whatsoever or register or take over any company with limited liability for any such purpose without the consent in writing of the Minister given on such conditions as to the locality of operations and persons to be employed by or on behalf of such person, as the Minister may prescribe.” This is also stipulated under Section 12 of the Immigration Regulations 2017 (the “Regulations”).

From the foregoing, the consent in writing issued by the Minister of Interior is a Certificate of Business Permit. This is only required where the Company is entirely owned by foreigners or where an international entity is engaging in a Joint Venture with a Nigeria Corporation or Company.

The following are points to note:

1. Business Permit is a Certificate that authorizes the foreign-owned Company to operate its in Nigeria.
2. Expatriate Quota grants approval for a Company to engage the services of foreign employee(s) or Director(s) in Nigeria.
3. The Expatriate Quota is valid for a period of three (3) years, in the first instance, and renewable biennially subject to a cap of ten (10) years.
4. The Share Capital of a fully foreign-owned applicant Company must not be less than N10 Million.
5. The foreign-owned Company’s registration with the Nigerian Investment Promotion Commission (NIPC) is one of the prerequisites for the grant of the Business Permit by the Ministry of Interior see here.
6. Companies seeking the grant of the Expatriate Quota are mandated to employ Nigerians to understudy the foreign experts for the purpose of training them and enable the Nigerian understudies to acquire the relevant skills for the eventual take-over of the expatriate quota positions.

Renewal of the Expatriate Quota

The Expatriate Quota has a validity period of three (3) years and is renewable for further periods of 2 years each subject to a maximum of 10 years. The documents required for an application for its renewal are:

1. Completed Immigration Form /T2.
2. Corporate Tax Clearance Certificate (original to be presented for sighting).
3. Current Tax Clearance certificate of the expatriate (original to be presented for sighting).
4. Expatriate Quota Returns for the three months preceding the date of approval.
5. Detailed Training program for Nigerians.
6. List of Nigerians understudying expatriate on prescribed formats showing date employed, qualification, etc.
7. List of Nigerian Senior/Management Staffs showing names, designations, qualifications, salaries per annum.
8. Certificate Current Audited Accounts.
9. Annual income tax Clearance certificate of the Expatriate staff (original to be presented for sighting).

Immigration Responsibilities, Returns and Penalties

• Expatriate Monthly Returns (EMR) – By virtue of Section 105(4)(b) of the Act and Section 52(6) of Regulations, the NIS requires Companies to prepare and submit the EMR on the utilization of their Expatriate Quota including details of their Nigerian Understudies. The EMR is required to be submitted within the first week of the month following the relevant month in review. Failure to comply or render the returns within the stipulated time constitutes an offense and attracts a fine of Three Million Naira (N3,000,00) upon conviction of the Company.
• Renewal of the Expatriate Quota – Companies that are granted the Expatriate Quota are required to apply for renewal before the expiration of the current one. Failure attracts a fine of Three Million Naira (N3,000,00).
• Nigerian Understudies and Utilization of Expatriate Position – An Expatriate Quota beneficiary Company is required to employ two (2) Nigerian Understudies for each approved position (Section 52(7) of the Regulations). Likewise, the Company is required to prevent the unauthorized use of its approved positions by other organizations. Where a Company defaults, it shall be liable to a fine of Three Million Naira (N3,000,00) for each month of default and the affected expatriate employees shall be deported.

In the subsequent edition, the categories of visa and entry permits for expatriates to live and work in Nigeria will be treated.