president Bola Tinubu has called on the Central Bank of Nigeria to suspend the implementation of its controversial cybersecurity tax policy and ordered a review.
This follows the House of Representatives' decision last Thursday asking the CBN to withdraw a circular directing all banks to start collecting a 0.5 percent cybersecurity tax on all electronic transactions in the country. was.
On May 6, 2024, the CBN issued a circular requiring all banks, mobile money operators and payment service providers to implement a new cybersecurity levy in accordance with the provisions of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act, 2024. has been published. .
According to the law, a levy equal to 0.5 percent of the value of all electronic transactions will be collected and transferred to the National Cybersecurity Fund, overseen by the Office of the National Security Advisor.
Financial institutions must apply the levy at the beginning of the electronic transfer.
The amount deducted will be explicitly stated in the customer's account under the descriptor “Cybersecurity Tax” and will be transferred by the financial institution. All financial institutions must start implementing the tax within two weeks from the issuance of the circular.
Implicitly, the deduction of the levy by financial institutions must begin on May 20, 2024.
However, financial institutions are required to make bulk transfers to NCF accounts domiciled in the CBN by the fifth business day of the following month.
The circular also provides deadlines for financial institutions to reconfigure their systems to enable complete and timely submission of remittance files to the Nigerian Interbank Payment System Corporation. Publication of circulars.
“All other financial institutions (microfinance banks, mortgage banks, development financial institutions) – within 8 weeks of publication of the circular,” the circular states.
The CBN emphasized strict compliance with this obligation and warned that financial institutions that fail to comply with the provisions will face severe penalties. As outlined in the law, companies that violate the law will be fined a minimum of 2% of their annual turnover if convicted.
This circular provides a list of transactions that are currently considered eligible for exemption to avoid multiple application of the levy.
These include loan disbursements and repayments, salary payments, intra-account transfers within the same bank or between different banks for the same customer, and intra-bank transfers between customers of the same bank.
Exemptions include transfers from other financial institutions to correspondent banks, interbank transactions, transfers from a bank to the CBN and vice versa, interbranch transfers within a bank, clearing and settlement of checks, letters of credit, Includes capital raising related financing.
Others include large amounts of money transferred from collection accounts, savings, and deposits, including transactions involving long-term investments such as Treasury bills, bonds, and commercial paper, as well as government social welfare program transactions.
These include not-for-profit and charitable transactions, including pension payments, donations to registered nonprofit organizations and charities, and educational institutions' transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions. transactions and transactions involving internal bank accounts. , interbranch accounts, reserve accounts, nostro and vostro accounts, escrow accounts.
The introduction of the new levy has provoked mixed reactions among stakeholders as it is expected to increase the cost of doing business in Nigeria and could hinder the wider adoption of digital transactions.
“Please stop collecting now.”
Members of the House of Representatives on Thursday called on the Central Bank of Nigeria to withdraw a circular directing financial institutions to begin implementing a 0.5% cybersecurity levy, calling it “vague”.
This development was in response to a motion filed by Mr Kingsley Chinda on the urgent need to halt and change the implementation of the Cybersecurity Levy.
According to the House of Representatives, the CBN will withdraw the first circular and “issue a clearer circular.”
Chinda had drawn the attention of the House to the multiple interpretations of the CBN Directive on the specifications of the Cybersecurity Act.
The House of Representatives subsequently expressed concern that unless immediate steps are taken to address concerns over the interpretation of the CBN Directive and the Cybersecurity Act, the Act may be incorrectly implemented.
However, a source aware of Mr Tinubu’s position on the issue said: sunday punch The president said he was aware of the economic burden on Nigerians since he launched tough economic reforms last May, adding that he did not want to risk adding to the burden with further levies.
A senior presidential official, who requested anonymity, told our correspondent: “The president is sensitive to the feelings of Nigerians and he will not want to proceed with the implementation of policies that will increase the burden on the people.
“So he asked the CBN to put the policy on hold and ordered it to be reviewed. I would like to say that he ordered the CBN, but that is not appropriate because the CBN is autonomous. asked the CBN to put it on hold and look at things again.”
Another presidential official, who requested anonymity because he was not authorized to speak on the matter, said these discrepancies prompted the president to order a reconsideration.
“If you look into it, this law is older than the Tinubu administration. It was enacted in 2015 and signed by Goodluck Jonathan. It is just being implemented.
“You know he (Tinubu) wasn’t there when that directive was circulated. And he doesn’t want his government to be seen as insensitive. As it stands, the CBN will not allow banks to start charging citizens. That's why the President is sensitive. His goal is not just to tax Nigerians that way. So he ordered a review of that law. Ta.”
Tax reforms that will not frustrate Nigerians — Shettima
Meanwhile, Vice President Kassim Shettima on Saturday said the tax reforms implemented by the Bola Tinubu administration were not aimed at dissatisfying Nigerians, but to maintain Nigeria’s investment friendliness.
The Vice President, who was represented by his Special Adviser on General Duties, Dr. Aliyu Umar, spoke at the closing ceremony of the Presidential Committee on Fiscal Policy and Tax Reform held at the Trancorp Hilton, Abuja. Shettima’s spokesperson, Mr. Stanley Nkwocha, disclosed this in a statement titled “Our tax reform was initiated for the benefit of all Nigerians – Vice President Shettima.”
He said that, contrary to some speculation, “we are not here to frustrate any sector of the economy, but to create a system of government that ensures the benefits of a prosperous tax system for all citizens.” I'm here,'' he claimed.
Development that welcomes suspension of tax collection – PDP
Reacting to the President’s decision, the National Publicity Secretary of the Peoples Democratic Party, Debo Ologunagba, welcomed the suspension of implementation of the cybersecurity levy policy, noting that the policy should not have been introduced at all.
“It was an anti-people decision from the beginning. It was an insensitive decision from the beginning. It was a surprise attack on the people who had been dissatisfied with heavy taxes from the beginning. In other words, it was necessary to impose taxes to introduce cybersecurity,” he said. This was a very cruel introduction as there was no one.
“We don't need to tax villagers and rural people for cybersecurity. People who don't even have light. They don't even have access to an internet connection. Well, if that's the show the president listens to, so be it. And , he must now continue to listen further and start considering where the problem started: the problem of eliminating subsidies without mitigating their effects. The President should go further to ensure that Nigerians can breathe by ensuring policies that will alleviate the hardships caused by the repeal.”
Also reacting to the development, Dr. Muda Yusuf, CEO of the Center for the Promotion of Private Enterprise, said the President's decision shows that he is a democrat, adding that the CBN will He added that there is a need to ensure that the process is very inclusive.
“The president's decision is in line with the cry of the people. There have been many protests on this issue, but the fact that the president has responded shows that he is a Democrat. He has shown himself to be a listening leader. So we have to commend him for listening to the people. That is a welcome development.
“The government should look at the policy now. I am sure it is not just the CBN. Since we have passed the law, MPs should also look at it. But the important thing is that the policy needs to be reviewed. And the apex bank should go beyond the government level and consult with stakeholders and the organized private sector. That's what makes the review so comprehensive.”
Debo Adeniran, director of the Center for Anti-Corruption and Open Leadership, also told Sunday Punch that while President Tinubu's decision should be applauded, the federal government should consider canceling the policy completely rather than suspending it temporarily. said.
He said, “This is the right step in the right direction. This further highlights the fact that President Tinubu is listening to the voice of the people. Maybe it is because he used to be an activist. knows that the voice of the people is the voice of God.
“But suspension of the policy alone is not enough. In that case, the insurance contract should be completely canceled. All taxes, rates and surcharges imposed on people should be rationalized and if they want to pay personal income tax We need to understand that it's what we pay. It's not that the government exempts us from personal income tax; we have to pay for all the services we should receive from the government. And the increase in oil and other micro-economic products should be cheaper and more affordable for all Nigerians,” he said.
Also, Professor of Economics at Olabisi Onabanjo University, Sherifudeen Tera, warned the Federal Government against causing further hardship to Nigerians. He said the policy was not a bad idea, but the timing was wrong.
He said: “There's nothing wrong with the levy, but it was the wrong time. Government should stop creating problems for themselves. People are fighting inflation and all kinds of inefficiency, and you… We're taxing them. The president did a good job of reversing that. It's not the right time to impose more burdens on Nigerians. I hope the president has the courage to do the right thing. I commend you for that.”
SERAP hints at lawsuit
Meanwhile, the Socio-Economic Rights and Responsibility Project threatened to sue if the federal government did not lift the levy within 48 hours. The group said the levy was “in clear violation of the provisions of Nigeria's 1999 Constitution (as amended) and the country's international human rights obligations and commitments.”
Labor rejects levy
However, the Nigeria Labor Congress has said that the Cybersecurity Tax and several other levies and taxes already imposed on the people have further exacerbated the financial burden on the people who are currently facing economic challenges. said.
A statement signed by the NLC Chairman, Joe Ahaero, called for the revocation of the directive by the CBN, adding that the federal government should prioritize policies that ease the economic burden on Nigerians. The NLC said the measure, ostensibly aimed at strengthening cybersecurity measures, could exacerbate the economic burden already faced by the public.
Additional reporting: Stephen Angbulu, Godfrey George, Imoleayo Oyedeyi, Ayoola Olasupo, Daniel Ayantoye
