DESPITE 16 payment exemptions listed by the Central Bank of Nigeria (CBN) on the new cybersecurity levy, some Nigerians are seeking a review of the directive amid growing economic hardship in the nation.
On Monday, May 6, the CBN directed banks and other financial institutions to implement a 0.5 per cent cybersecurity levy on all electronic transfers.
The CBN said the policy would take effect in two weeks, adding that the charges would be remitted to the National Cyber Security Fund, which would be administered by the Office of the National Security Adviser.
The analysis of the charge showed that ₦5 will be charged on every ₦1,000 transferred; ₦50 on ₦10,000; ₦500 on ₦100,000; ₦5,000 on ₦1,000,000; ₦50,000 on ₦10,000,000; and ₦500,000 on ₦100,000,000.
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Some citizens who spoke with The ICIR urged the National Assembly to conduct a public hearing before the enforcement since Nigerians are already overburdened by various forms of taxes.
“It is not about exempting some transactions; it is about the principle of tax. Nigerians are already overburdened; why burden them again? There is income tax, value-added tax, education tax, and even police tax. There are all manner of bank deductions and surcharges. Most Nigerians even pay for local security guards in the street because of insecurity. Why the cyber security levy again?” A development economist, Henry Ademola Adigun, told The ICIR.
Expressing similar concerns, former Director-General of Abuja Chamber of Commerce and Industry (LCCI) Muda Yusuf told The ICIR that businesses and citizens in general are yet to recover from the shocks of current reforms.
According to him, inflationary pressures have not abated, the high cost of living is still a major worry, and operating and production costs for businesses remain elevated amidst weak consumer purchasing power.
“This is not a good time to impose an additional levy on businesses and citizens. The magnitude of the levy is even of a bigger concern,” he said.
“The expectations of citizens and corporate organisations are that taxes and levies are being rationalised and streamlined for better business environment.”
Commenting further on various forms of taxes in the country, he noted that businesses were already saddled with the following federal taxes: company tax, tertiary education tax, stamp duties, NITDA levy, value added tax, NASENI levy, police trust fund levy, among others.
According to Yusuf, the cybercrime levy is even more troubling because it is a tax on electronic transactions, not on profit.
“It has no regard to whether the business is healthy or not. Even loss-making companies are liable. The poorer segments of society are not exempted either. This raises serious issues of equity. There is also the issue of proportionality. That is relating the project objective to the amount of revenue being mobilised.
“By the account of the Nigeria Interbank Settlement System [NIBSS], electronic payments on its platform in 2023 was N600 trillion. 0.5 per cent of this is N3 trillion, “he added.
He pointed out that the industry data for electronic payments in 2022, according to the CBN website, was N1,550 trillion. and 0.5 per cent of this would give N7.75 trillion.
“Even if we discount these numbers for the exemptions provided in the law, what will be left would still be staggering.”
Notably, the apex bank said the cybersecurity levy would be deducted at the point of electronic transfer origination and reflected in customers’ accounts.
Meanwhile, the CBN listed 16 banking transactions exempted from the levy.
They include:
- Loan disbursements and repayments
- Salary payments
- Intra-account transfers within the same bank or between different banks for the same customer
- Intra-bank transfers between customers of the same bank
- Other Financial Institutions instructions to their correspondent banks
- Interbank placements
- Banks’ transfers to CBN and vice-versa
- Inter-branch transfers within a bank
- Cheque clearing and settlements
- Letters of credits
- Banks’ recapitalisation-related funding – only bulk funds movement from collection accounts
- Savings and deposits, including transactions involving long-term investments such as treasury bills, bonds, and commercial papers
- Government social welfare programmes transactions e.g. pension payments
- Non-profit and charitable transactions, including donations to registered non-profit organizations or charities
- Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions
- Transactions involving the bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.