Business

Cybersecurity levy, other taxes to fuel inflation and impede business growth – CPPE

Published

2 weeks ago

May 8, 2024

The Centre for the Promotion of Private Enterprise, (CPPE) has stated that the newly introduced cybersecurity levy and other numerous taxes imposed by federal, state, and local governments in Nigeria are impeding the capacity of businesses to drive economic growth, leading to job losses and inflation across the country.

This was disclosed in a statement signed by the CEO of the CPPE, Dr. Muda Yusuf, in reaction to the new policy, where he called for a suspension of the levy and stakeholder deliberation on it. He said the levy, in its present form, will cause hardship on citizens and a burden on investors.

According to him, businesses and investors are already saddled with numerous taxes ranging from education tax, value added tax (VAT), company income tax (CIT), stamp duty, NITDA, Police Trust Fund, among others, coupled with NYSC levy and tertiary health levy that are still in the pipeline.

He noted that the new levy contradicts the position of the Presidential Committee on Fiscal Policy and Tax Reforms, which aims to streamline taxes for a better business environment.

He stated, “Businesses and the generality of citizens are yet to recover from the shocks of current reforms. Inflationary pressures have not abated, high cost of living is still a major worry, operating and production costs for businesses remain elevated, amidst weak consumer purchasing power. This is not a good time to impose an additional levy both on businesses and citizens.”

“Meanwhile, businesses are already saddled with the following federal taxes: Company Tax, Tertiary Education Tax, Stamp Duties, NITDA levy, Value Added Tax, NASENI Levy, Police Trust Fund Levy, among others. Still in works are NYSC Levy and Tertiary Health Levy. There are also a plethora of taxes and levies imposed by states and local governments.”

Projected amount to be generated yearly

Furthermore, the CPPE CEO queried the proposed amount to be generated from the levy using the percentage of transaction to be deducted and the total value of e-payment transactions in 2023 as per the Nigeria Interbank Settlement System (NIBSS).

He explained that e-payment transactions amounted to N600 trillion in 2023 and 0.5% of that figure is N3 trillion, which is more than the budget for infrastructure in the 2024 Appropriations Act.

He also warned that such levies negate the cashless policy drive of the Central Bank of Nigeria (CBN) and might push people into cash-based transactions.

Backstory

On Monday, the CBN mandated banks and other payment service providers to begin deducting 0.5% of the total value of electronic transactions and remit to the National Cybersecurity Fund to be managed by the Office of the National Security Adviser (ONSA).

The apex bank noted that the policy is part of the implementation of the recently passed Cybercrime, (Prohibition and Prevention etc.) Act of 2024.

Apart from that, firms are battling with numerous taxes and levies which hurt their bottom-lines and their capacity to expand or create jobs.