Financial planning is germane when considering the need for expatriate employees. This has become necessary given the increase in the cost of doing business in Nigeria due to rising inflation, infrastructure challenges, and the removal of the fuel subsidy by the government, among other factors.

As businesses become increasingly global, many organizations will be forced to cut through the financial complexities of employing expatriates. It is therefore imperative that organisations are aware of the financial implications of employing expatriates through the various assignment processes (pre, during, and post-assignment).

This article will identify the associated financial implications of employing expatriates, such as the cost of obtaining relevant quota approvals, visas, expatriate permits, Pay-As-You-Earn (PAYE) taxes, and Social Security.

Expatriate Employment in Nigeria – An Overview

An expatriate employee (expat) is an individual living or working in a foreign country where they do not hold citizenship. Businesses that utilize expat employees as part of their global mobility strategy choose to do so for a variety of reasons, ranging from the transfer of skills, knowledge, and technology, to filling temporary shortages or to creating the 'corporate glue' that binds an international organisation together.

Furthermore, increased Foreign Direct Investment (FDI), which is not only the transfer of money but a mixture of financial and intangible assets such as technologies, managerial capabilities, marketing skills, and other assets, is believed to favourably impact the host country. This entails bringing in highly productive resource into the host economy, creation of jobs in various sectors and domestic industries, and attracting FDI inflows. The Nigerian government, in its quest to increase FDI inflow and provide easy access for organisations to employ expat employees, has made provision for the employment of highly skilled foreigners, through the issuance of Expatriate Quota (EQ) approvals.

The Nigeria Immigration Service (NIS) is responsible for the administration and issuance of all immigration facilities utilised for expatriate employment in Nigeria. There are two (2) modes of expatriate employment in Nigeria, the first being the Subject to Regularisation (STR) Visa which is the appropriate visa for long-term employment and residency in Nigeria. This visa category is tied to the pre-obtainment of a valid EQ approval from the Federal Ministry of Interior (FMI)1. The STR visa is usually obtained from the applicable Nigerian mission abroad upon submission of the required documentation, which includes a valid EQ approval issued to the organisation by the FMI.

The second medium is the Temporary Work Permit (TWP) Visa which is a single-entry work visa for short-term assignments (usually a period not more than 6 months) in Nigeria. Organisations can apply to the Nigeria Immigration Service (NIS) Headquarters, Abuja for a TWP pre-approval letter. The pre-approval letter, alongside other application documents, can be submitted to the Nigerian Mission abroad to obtain the TWP visa.

Significance of the Employment Cost in the past few years

The cost of employing expatriates has significantly increased over the years due to several factors. One of these factors is the seemingly relentless rise in the cost of living, one of the effects of the increase in the inflation rate which as at November 2023 stood at 28.28%. This has in turn impacted the relocation cost, accommodation, logistics, and generally the cost of living of an expatriate employee in Nigeria. Based on this, employers of expatriate labour are spending more on employing expats, than they were in prior years.

Organisations desirous of employing expatriates are to consider the financial costs to be expended at the three (3) stages of the expat's assignment – Pre-Assignment, During Assignment, and Post-Assignment.

Pre-Assignment Expatriate Employment Costs

There are certain preparations to be made before an expatriate is engaged for long-term or short-term employment in Nigeria. It is important for companies to apply for and obtain legal documents and approvals necessary for employment. Some of the documents required are listed below:

  • Business Permit: The Business Permit (BP) is issued to joint ventures and wholly foreign-owned companies and organisations who intend to start business operations or employ expatriate manpower. Businesses and organisations that do not have a Business Permit may apply by submitting relevant documents to the FMI. The statutory fee for obtaining a Business Permit ranges from N140,000.00 – N350,000.00, payable to the FMI subject to the nature of business of the applying organization. Wholly Nigerian-owned organisations do not need a Business Permit to employ expatriates.
  • Expatriate Quota (EQ) approval: An Expatriate Quota approval is an authorisation issued in the form of a letter by the FMI, to companies that have met the criteria for engaging the services of expatriates on a long-term basis. It is the basis for long-term expatriate employment and residency in Nigeria.

To obtain this approval, incorporation documents of the requesting organisation, proposed EQ positions, corresponding job descriptions, and other required documents, alongside an application letter should be submitted to the FMI. Once approved, payment of the prescribed statutory fees should be made via the FMI's dedicated portal, prior to the issuance of the EQ approval letter. These fees range from ₦100,000 to ₦7,000,000 ($100 - $7,500) depending on the application type. A comprehensive application and fee schedule can be accessed via this link.

  • Visa Application and Fees: Visa applications should be submitted to the Nigeria Missions abroad. The applicant is required to submit the documentation specified by the Mission, alongside their passport and pay the applicable visa processing fee, ranging from $20 - $1,000. Information on the visa fees which are based on nationality and visa category can be obtained from the website of the applicable Nigeria Mission abroad or the NIS' website at the point of submission of the application,. The relevant Mission verifies the documentation, evaluates the qualification of the applicant(s), and where satisfied, issues the required entry visa to the applicant.
  • Relocation Cost/Allowance: These are costs associated with ensuring that the relocating employee is given the necessary support and information required for their new assignment in Nigeria. Considering that relocation may have some impact on the family, lifestyle, and career progression, relocating employees may make certain demands on organisations to assist to relocate their family members or provide certain relocation allowances. Individuals in charge of Human Resources (HR) should spell out the relocation cost to be borne by the employer from the onset, preferably in writing and this should be agreed upon between the employer and employee to eliminate future disputes. In addition, the Personal Income Tax (PIT) legislation exempts from tax the costs associated with an employee's move to take up new employment or relocate to a new employment location. However, for such expenses to be exempt, they must be deemed reasonable (although the word 'reasonable' is not defined in any tax legislation), and if deemed reasonable, the employer must present supporting documents (receipts) for the relocation expenses. Based on this, the company is to bear in mind the tax implication of the relocation cost to both the employer and employee.

Expatriate Employment Costs During Assignment

Organisations are expected to incur certain costs to ensure the smooth running of their expatriates' assignments and compliance with the relevant regulations in Nigeria. Some of these costs are examined below:

  • Residence Permits – CERPAC/ECOWAS Cards: Expatriate employees are expected to obtain applicable residence permits to enable them to work and live in Nigeria. Statutory costs include costs for the purchase of CERPAC forms at $2,000 per form and for obtaining Economic Community of West-African States (ECOWAS) cards, ranging from ₦500 to ₦25,000 ($1 - $25) depending on the nationality of the applicant. In addition, it is important for companies to monitor the validity of all their expatriate residence permits and apply for a renewal, when due, at the NIS.
  • Renewal of EQ Approvals: EQ approvals for organisations outside of the oil and gas industry is renewable for two (2) years each, within the lifespan of seven (7) years, following the initial Establishment Grant valid for three (3) years. The EQ positions for companies operating in the oil and gas industry are valid for an initial period of two (2) years and can only be renewed for an additional period of two (2) years, in line with the guidelines of the Nigerian Content Development and Monitoring Board (NCDMB). Expatriate employers should continuously monitor the validity of their EQ slots and apply for renewal when due. This will require the payment of relevant statutory fees, which can be accessed in this link.
  • Statutory Reporting and Compliance: Expatriate employers are required to submit a monthly report to the NIS and FMI, on the utilization of the Expatriate Quota (EQ) approval issued to them. Information on any visiting expatriates, whether such expatriates are on Business, Temporary Work Permit (TWP), or Tourist visa should also be disclosed in the Expatriate Monthly Returns (EMR), in line with the prescribed formats. The EMR shows information, such as their nationality, validity of residence permit, place of residence, quota utilization, and details of understudies, among others.

Failure to submit the EMR at the relevant offices and locations is a violation and will attract a fine upon conviction. According to Section 105 (4b) of the Immigration Act 2015, "Any corporate body that refuses to render expatriate monthly returns shall be liable on conviction to a fine of three million naira (about USD $13,600)". Late submission of EMR is deemed as non-compliance and subject to rejection, query, or investigation of erring companies, by NIS.

  • PAYE Taxes and Social Security Costs: In accordance with the Personal Income Tax Act, taxation in Nigeria is generally based on the residency rule. An individual is deemed a resident in Nigeria if the individual exercises the duties of his employment in Nigeria. Hence, the physical presence of an expatriate in Nigeria is one of the bases for ascertaining the taxability of such an expatriate.

The other bases of ascertaining the taxability of an expatriate employee are: if the income is derived in Nigeria, remuneration of the employee is borne by a fixed base of the employer in Nigeria, or the employee has been in Nigeria for an aggregate of 183 days (inclusive annual leave or temporary period of absence) or more within a 12-month calendar year. Therefore, expatriates with valid resident permits in Nigeria are liable to PIT.

In addition, the taxation of individuals falls under the purview of the State Internal Revenue Service (SIRS) as provided in the Personal Income Tax Act 2011, as amended.

The company is also required to contribute to the Employee Compensation Scheme (ECS) and Industrial Training Fund (ITF), using the employee's remuneration as the basis, which is calculated as 1% of the total annual payroll. Also, although 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.

  • Accommodation, Protocol, and other Logistics (Support Staff, Transport): Companies may provide this support to their expatriate employees during their employment period and should also consider the financial implications of providing these.

Post Assignment Expatriate Employment Costs

Upon completion of the assignment, employers are expected to submit an End-of-Assignment notification to the Nigeria Immigration Service (NIS). This notification may be a request for 'Deletion from the Company's EQ records' (for expatriates on Quota) or a 'Notification of Exit' (for ECOWAS nationals). Though these notifications do not require the payment of a statutory fee, the company is expected to obtain and submit an affidavit, in addition to other relevant documentation, and ensure that it obtains the relevant acknowledgments and slips for its records.


To appropriately plan for expats' employment in Nigeria, it is advisable for employers to approach expatriate employment holistically, in line with current business demands and the associated expenditures.

It is also essential for organisations who intend to engage expatriates to develop a well-thought-out expatriate compensation strategy while keeping Nigerian tax rules in mind. They should also examine the availability and authenticity of the required documentation, to ensure compliance with the applicable laws and statutory reporting.

Furthermore, employers of expatriates are advised to monitor the validity of expatriates' residence permits and the duration of assignments in Nigeria. This will enable them to promptly process the renewals of residence permits and EQ approvals as well as submit end-of-assignment notifications, to avoid gaps that can lead to violation.

Finally, we recommend that they engage the services of immigration and tax consultants who would bring their wealth of experience and expertise to assist them to efficiently manage their expatriate portfolio.


1. The Business Facilitation Act (BFA) 2023 has stripped the FMI of this responsibility. The NIS is now empowered to issue EQ approvals and Business Permits to organisations, although this is yet to be implemented.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.