Introduction
Expatriate Employment occurs when a foreign national accepts a job/role outside of their home country, which may be taken up independently or as part of the Global Mobility function of an organisation1. The use of expatriate employment plays a strategic role in talent development, workforce retention, and transfer of skills, knowledge, and technology.
The term 'End-of-Assignment' refers to the completion and conclusion of an assignment in a location or with an organisation. The reasons for end-of-assignment are varied: completion of a time-based project in a location, change of employment, illness or injury, assignment termination, retirement, or even death.
In Nigeria, companies are required to obtain the consent of the Comptroller General of the Immigration service (CGIS) through relevant approvals and permits before employing foreigners and submit End-of-Assignment notifications to the Nigeria Immigration Service (NIS) at the end of their expatriates' assignment. However, some organisations either fail to comply with this requirement or delay the submission of exit notifications for various reasons. Outright or partial disregard of this statutory requirement portends huge liabilities and fines for the organisation, stemming from ensuing exposure to immigration and tax investigation/audits and other administrative inconveniences.
This article examines the types of End-of-Assignment notifications and identifies the compliance implications of non- or delayed submission of such notifications. It also provides workable insights to organisations on adopting practices to ensure compliance with this critical but much-overlooked aspect of expatriate employment in Nigeria.
End-of-Assignment Notification – An Overview
The Nigeria Immigration Service (NIS) grants immigration facilities to companies to enable them to employ expatriate professionals to meet their business needs and fulfil business objectives. These facilities enable work-related assignments and are issued to expatriates upon their arrival in Nigeria and submission of the required documentation to the NIS by the employer. These include Residence Permit (Green Card/CERPAC forms), Temporary Work Permit (TWP) visa permit, and ECOWAS residence permit/card.
Upon completion of an expatriate's assignment in Nigeria, the company is required to submit an end-of-assignment notification to the NIS, releasing it of all immigration and financial responsibilities on behalf of the exited expatriate. Although this requirement is not expressly stated in the Immigration Act and other related legislation, this practice prevents undue immigration/tax exposures on the organisation.
Types of End-of-Assignment Notifications
End-of-Assignment notifications vary based on factors like the visa category, nature of assignment, and residence status of expatriate employees. These include:
- Deletion from Expatriate Quota (EQ) records: This applies to exited non-ECOWAS expatriates on long-term assignments (Green card status). The company is required to apply to the NIS, requesting the deletion of the expatriate from its Quota records and obtain a deletion slip upon completion of the application.
- Notification of Exit Application: Considering that ECOWAS employees do not occupy EQ positions, the deletion application does not apply to such personnel. However, it is necessary for the company to officially relinquish immigration and financial responsibilities on behalf of such individuals. The acknowledged copy of this official communication to the NIS suffices for the organisation in place of a deletion slip.
- Quarterly TWP Returns: Organisations that have employed expatriates on short-term basis (TWP) also have the need to relinquish the immigration responsibilities on those expatriates. This can be accomplished through submission of TWP returns to the NIS and keeping the acknowledged copy of the submission in their records.
Some documents required for the above-mentioned submissions are, Residence Card (CERPAC/Green card/ECOWAS card), evidence of disengagement from the organisation, affidavit confirming the occurrence of the expatriates' exit, amongst others.2
Implication of Non- or Delayed Compliance
Organisations that follow the relevant end-of-assignment notification process release themselves from all immigration and financial obligations to their exited expatriates. Hence, putting it off or outright overlooking it will have far-reaching consequences on the business.
- Lack of evidence of disengagement: Where a notification of exit is not submitted or is delayed, the company may not have evidence of disengagement that will be recognized by the regulatory authorities. In such situations, the company may be unable to prove that it no longer bears immigration or tax liabilities on behalf of an exited expatriate employee, and this may result in prolonged investigations and audit sessions with regulators. Also, exited expatriates who remain in possession of their (valid) residence permit may expose their previous employer to additional immigration and tax exposures if they illegally take up employment with another company in Nigeria.
- Exposure to Investigations and Inspections: Failure to comply may result in exposure to Investigation and Inspection exercises by the NIS. Relatedly, it could result in waste of human resources, reputational damage, and increased financial liabilities.
- Continuous tax liabilities: Organisations are exposed to continuous tax burdens on behalf of an expatriate until a formal exit notification is submitted to the NIS and evidence is obtained for recordkeeping and reference. State Internal Revenue Services (SIRS) in Nigeria compute Pay-as-You-Earn (PAYE) taxes for resident expatriates based on payroll and copies of submitted Expatriate Monthly Returns (EMR) to the NIS. Therefore, failure to promptly process End-of-Assignment notifications may negatively impact the computation of PAYE tax liability and reconciliation of same with the tax authorities during an audit or investigation procedures.
- Inability to utilize EQ Positions: Previously occupied EQ slots that are not freed up through deletion by the NIS upon the exit of the incumbent expatriate may not be available for subsequent utilisation by another expatriate. If another expatriate is offered employment on the same EQ slot (without deleting the incumbent), this will lead to an over-placement of expatriates on EQ and the residence permit application of the incoming expatriate will be queried by the NIS. Consequently, a copy of the deletion slip for the previous occupant of the EQ slot is required to resolve the query and update the EQ records of the company.
- Penalty and Fines: Non or delayed submission of relevant notification applications may expose the company to certain penalties and fines. Although the Immigrations Act (2015) and Immigration Regulation (2017) did not mention penalties for failure to submit End-of-Assignment notifications, companies may be exposed to payment of huge tax liabilities, including the applicable penalties and interest, for expatriates for whom the organisation has no evidence of deletion or relinquishment of immigration and financial responsibilities.
Conclusion and Recommendation
Organisations are constantly on the lookout for ways to reduce tax exposures, especially in relation to PAYE remittances and one way to limit such exposure is prompt submission of End-of-Assignment notifications. It is advisable to educate expatriates on exit procedures before and during their assignment, and constantly monitor the duration of their stay and the expiration dates of their immigration documents.
Furthermore, expatriate employees should be duly informed of the need to return their residence permits and provide copies of other relevant documents such as final departure tickets and exit stamps, upon completion of their assignments or exit from the company/country, to facilitate prompt submission of End-of-Assignment notifications to the NIS. It is important to note that these changes must reflect in the EMR before the subsequent monthly filing, as failure to do so may result in tax liabilities and immigration exposures during investigation and audit exercises.
Finally, periodic internal review is critical in ensuring that organisations remain in compliance with the relevant immigration/tax laws and regulations, and it is best practice to maintain an expatriate information tracker for this purpose. Alternatively, they can engage the services of immigration and tax consultants who would with their wealth of experience and expertise assist them in efficiently managing and monitoring their expatriate portfolio while ensuring sustained compliance with extant laws.
Footnotes
1 This term is used interchangeably with 'company' in this article to mean employers of labour.
2 There are varying requirements for each kind of submission.
The opinion expressed in this article is solely personal and does not represent the views of any organization or association to which the authors belong.