Global Tax and Advisory firm, KPMG Nigeria has seemingly walked back on its caustic criticism of the cybercrime levy imposed on Nigerians by the federal government.
In a tweet on its official social X handle, the firm noted that its Newsletter on the subject was not meant to criticise the federal government but to highlight key considerations and further ask members of the public to reach out for clarifications.
It stated, “We address misconceptions about our Cybersecurity Levy newsletter, which offers balanced views on government policies, presenting both benefits and drawbacks. It was not meant to criticize but to underscore key government considerations.”
The decision to walk back on the comments may be an attempt to avoid angering government officials especially the powerful Office of the National Security Adviser.
Recommended reading: Explainer: Is CBN’s cybersecurity levy 0.5% or 0.005%?
Backstory
Nairametrics had earlier reported KPMG’s commentary on the order from the CBN to banks and PSPs to start collecting 0.5% of the value of any transaction to a cybersecurity fund to be managed by the office of the National Security Adviser (NSA) where it stated that no country can tax its way to prosperity given the revenue generation drive of the federal government.
- It also stated that higher taxes do not lead to sustainable growth and the timing of the implementation of the section of the Act is wrong considering the prevailing economic conditions in the country.
- It stated then, “Given this context, the government may go to any length to mobilize the required revenue. However, research has shown that higher taxes do not lead to sustainable growth. No country can tax itself to prosperity! Perhaps, it is in recognition of this that the current administration and the Presidential Committee on Fiscal Reforms have often emphasized that the government will not introduce new taxes.”
- Additionally, the company criticized the absence of a cost-benefit analysis despite multiple projections estimating annual revenue of about N3 trillion from the levy. It also recommended that such levies be supported by a detailed expenditure report to justify their imposition.
- Moreover, it raised concerns about the act’s effectiveness in promoting financial inclusion nationwide, considering the possibility that individuals and businesses might turn to alternative transaction methods due to the levy.
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What you should know
The Central Bank of Nigeria (CBN) had earlier directed banks and Payment Service Providers (PSPs) to implement a 0.5% cybersecurity levy on the total cost of online transactions. This levy is to be managed by the Office of the National Security Advisor (NSA).
- The apex bank has issued a warning that non-compliance with this directive will result in a penalty of at least 2% of the annual revenue of the offending businesses.
- Individuals and organizations have expressed their disapproval of the levy, arguing that it imposes an additional financial burden on businesses amid the current economic climate.
