If the new cybersecurity tax is implemented, you will be charged N500 on N100,000 and N5,000 on N1 million. The 0.5 per cent is applied to electronic transactions as mandated by the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024.
The 0.5% will be paid by the transaction originator, which will be deducted by the financial institution and remitted to the National Cybersecurity Fund administered by the Office of the National Security Adviser (ONSA).
While the new levy has triggered negative reactions among Nigerians, describing it as extortion despite existing bank transaction charges, the Act specifically exempted 16 categories of electronic transactions from the cybersecurity tax.
They are:
1) Salary payments
2) Loan disbursements and repayments
3) Intra-account transfers within the same bank or between different banks for the same customer
4) Intra-bank transfers between customers of the same bank
5) Banks Interbank placements
6) Other Financial Institutions (OFIs) instructions to their correspondent
7) Banks’ transfers to CBN and vice-versa
8) Cheque clearing and settlements
9) Inter-branch transfers within a bank
10) Letters of Credits (LCs)
11) Government Social Welfare Programs transactions e.g. Pension payments
12) Banks’ recapitalization related funding – only bulk funds movement from collection accounts
13) Non-profit and charitable transactions including donations to registered nonprofit organisations or charities.
14) Savings and deposits including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers.
15) Educational Institutions transactions, including tuition payments and other transaction involving schools, universities, or other educational institutions.
16) 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.
What does this mean?
If your transaction falls under any of the above categories of money transfers, the 0.5% levy will not apply. According to the CBN circular, the new levy is expected to be implemented by financial institutions in Nigeria by May 20, 2024.