CBN Officially Withdraws Cybersecurity Levy

The Central Bank of Nigeria (CBN) has officially withdrawn the directive earlier given to banks to enact the process of deduction of cyber security levy to be administered by the office of the National Security Adviser (NSA).

This was disclosed in a circular to different categories of banks on Sunday evening, mobile money operators, payment service providers and others signed by the apex bank’s Director of payments system management, Chibuzor Efobi and Director of financial policy and regulation, Haruna .B. Mustafa.

According to the statement, “the circular on deduction and collection of the cyber security levy is hereby withdrawn.”

The apex bank had in line with the enactment of the 2024 cyber crime (prohibition, prevention etc) amendment Act of 2024 which provides for a 0.5percent deduction of the value of all electronic transactions to the National Cyber Security Fund which would be administered by the office of the NSA

Recall that aside from general condemnation of the directive, members of the House of Representatives had asked the CBN to withdraw the circular directing financial institutions to commence implementation of the 0.5 per cent cybersecurity levy, describing it as “ambiguous”

The development was in response to a motion on the urgent need to halt and modify the implementation of the cybersecurity levy, moved by honourable Kingsley Chinda.

According to the GreenHouse, the CBN is to withdraw the initial circular, and “issue a more understandable one”.

Honourable Chinda had drawn the attention of the House to multiple interpretations of the CBN directive against the specifications in the Cybersecurity Act.

The House then expressed worry that the Act would be implemented in error if immediate steps were not taken, to address the concerns around the interpretation of the CBN directive and the Cybersecurity Act.

The CBN on the 6th of May, 2024, issued a circular mandating all banks, mobile money operators, and payment service providers, to implement a new cybersecurity levy, following the provisions laid out in the Cybercrime (Prohibition, Prevention, etc.) Amendment Act 2024 (“the Act”).

According to the Act, a levy amounting to 0.5 per cent of the value of all electronic transactions, will be collected and remitted to the National Cybersecurity Fund (NCF), overseen by the Office of the National Security Adviser.

Financial institutions were required to apply the levy at the point of electronic transfer origination. The deducted amount was to be explicitly noted in customer accounts under the descriptor “Cybersecurity Levy” and remitted by the financial institution.

According to Andersen Global, the introduction of the new levy has elicited mixed reactions from stakeholders as it will inevitably increase the cost of doing business in Nigeria and may impact the growth in adoption of digital transactions. While the government continues its drive to increase revenue, the introduction of this additional levy may appear ill-timed considering the current economic climate vis-a-vis the government’s commitment to the National Tax Policy of 2017 to reduce the number of taxes in Nigeria.

Financial institutions and payment service providers will also need to adjust their financial and operational strategies to accommodate and account for the new levy to ensure they remain compliant while managing additional costs of compliance. More so, business owners who rely heavily on digital transactions for receiving payment may see an increase in operational costs due to considerations on adjustments in pricing and cost transfer. It is therefore important for stakeholders and businesses to analyse the financial impacts of this directive on their cash flow.

Source:- Tribuneonlineng