In recent news, the Central Bank of Nigeria (CBN) has instructed all banks in the federal republic of Nigeria to impose a 0.5% cybersecurity tax on all transactions.
The circular reads in parts;
“Following the enactment of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024 and under the provision of Section 44 (2)(d) of the Act, a levy of 0.5 per cent (0.005) equivalent to a half per cent of all electronic transactions valued by the business specified in the Second Schedule of the Act, is to be remitted to the National Cybersecurity Fund, which shall be administered by the Office of the National Security Adviser.” The circular stated.
This circular was released by CBN on May 1, 2024 and levy will be effective two weeks after the announcement.
The levy shall be applied at the point of electronic transfer origination. The deducted amount shall be reflected in the customer’s account with the narration, “Cybersecurity Levy”.
While the tax covers most electronic transactions, the CBN has specifically outlined exemptions to ease the burden on citizens and businesses.
The following transactions are free from the new tax system;
1. LOAN DISBURSEMENTS REPAYMENTS: Individuals and businesses who are taking out loans from government or private lenders are not subject to the 0.5% tax.
2. SALARY: Salaries are exempted from the tax, employees are assured of receiving their full salary without additional deductions.
3. INTRA-ACCOUNT TRANSFERS WITHIN THE BANK OR BETWEEN DIFFERENT BANKS FOR THE SAME CUSTOMER: All transfers between accounts within the same bank, whether for the same customer or between different customers are exempted from the 0.5% tax.
4. OTHER FINANCIAL INSTITUTIONS’ (OFIs) TRANSACTIONS TO THEIR CORRESPONDENT BANK: OFIs making payments to their correspondent banks are not subject to the cybersecurity tax.
5. INTER-BANK PLACEMENTS
6. BANK TRANSFERS TO CBN AND VICE VERSA
7. INTER-BRANCH TRANSFERS WITHIN A BANK: All transfers within a bank are exempted.
8. CHEQUES CLEARING AND SETTLEMENT: Cheque clearing and settlement are exempted from the cybersecurity tax.
9. BANKS RECAPITALIZATION-RELATED FUNDING: Transactions such as bulk funds movements from collection accounts are exempted from the cybersecurity tax.
10. SAVINGS AND DEPOSITS (including transactions involving long-term investments such as treasury bills, bonds and commercial papers): Savings and other long term investments are exempted.
11. GOVERNMENT SOCIAL WELFARE PROGRAMMES TRANSACTIONS: Transactions related to social welfare programs, such as pension and gratuities payments, are exempt.
12. NON-PROFIT AND CHARITABLE TRANSACTIONS: Donations to registered NGOs and charities are exempted.
13. EDUCATION INSTITUTE TRANSACTIONS (tuition payments and other transactions involving schools, universities or other educational institutions): Transactions that involve payment to schools are exempted.
14. Transactions involving 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.
The cybersecurity levy which is intended to enhance the safety of digital transactions, could potentially impose extra financial pressure on the citizens and businesses. This might lead consumers to rethink their banking behaviors due to increased costs associated with specific transactions.
