CBN Reimposes Cyber Security Levy Amidst Serious Concerns From Nigerians

The Central Bank of Nigeria, CBN, has re-introduced the controversial Cybersecurity Levy on electronic transactions. The Yemi Cardoso-led bank said the fee will now be 0.005 percent rather than 0.5 percent it initially proposed.

The CBN said in its new guidelines for 2024-2025 that the fee has been reduced downward, stressing that it has instructed commercial banks and other financial institutions, OFIs to enforce the collection.

“The CBN shall continue to enforce the payment of the mandatory levy of 0.005 per cent on all electronic transactions by banks and other financial institutions, by the Cybercrime (Prohibition, Prevention, etc.) Act, 2015,” the guidelines said.

The magazine reported that serious backlash had trailed the introduction of the levy in May this year, forcing the apex bank to make a retreat.

For instance, the 2023 Presidential candidate of the Labour Peter, Peter Obi had criticised the CBN, saying the levy will further milk the dying Nigerian economy.

Writing on his X handle Obi said that “the introduction of yet another tax, in the form of Cybersecurity Levy, on Nigerians who are already suffering severe economic distress is further proof that the government is more interested in milking a dying economy instead of nurturing it to recovery and growth.

“This does not only amount to multiple taxation on banking transactions, which are already subject to various other taxes including stamp duties but negates the Government’s avowed commitment to reduce the number of taxes and streamline the tax system.

“The imposition of a Cybersecurity Levy on bank transactions is particularly sad given that the tax is on the trading capital of businesses and not on their profit hence will further erode whatever is left of their remaining capital, after the impact of the Naira devaluation high inflation rate. It is inconceivable to expect the suffering citizens of Nigeria to separately fund all activities of the government.

“Policies such as this not only impoverish the citizens but make the country’s economic environment less competitive.

“At a time when the government should be reducing taxes to curb inflation, the government is instead introducing new taxes. And when did the office of the NSA become a revenue-collecting center?

“And why should that purely national security office  receive returns on a specific tax as stated in the new cybersecurity law?” he said.

According to the circular sent to banks five months ago, the cybersecurity fee shall be deducted at the point of making electronic transfer and remitted by the banks.

The CBN stated that the circular which is in line with the Cyber security Act of 2015 was a follow-up on an earlier one dated June 25, 2018 (Ref: BPS/DIR/GEN/CIR/05/008) and October 5, 2018.

Following the enactment of the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024 and under the provision of Section 44 (2)(a) of the Act, a levy of 0.5 per cent (0.005) equivalent to a half per cent of all electronic transactions value by the business specified in the Second Schedule of the Act, is to be remitted to the National Cybersecurity Fund which the Office of the National Security Adviser shall administer, the apex bank said.

The CBN said: “The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration, ‘Cybersecurity Levy’.

“Deductions shall commence within two weeks from the date of this circular for all financial institutions and the monthly remittance of the levies collected in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month.”

The apex bank had warned commercial banks and OFIs to comply strictly failure of which defaulters will pay not less than two per cent of their annual turnover as penalty.