Nigerians React as FIRS Introduces N50 Levy on Electronic Transfers
“Another blow to the common man’s wallet,” laments a Twitter user, encapsulating the widespread discontent surrounding Nigeria’s new Electronic Money Transfer Levy (EMTL). Starting December 1, 2024, every electronic transaction of ₦10,000 or more will incur a ₦50 charge, mandated by the Federal Inland Revenue Service (FIRS). With the policy affecting all banks and fintech platforms, including popular services like Opay and Moniepoint, Nigerians are bracing for its ripple effects on their finances and daily lives.
What is the N50 EMTL and Why Now?
The Electronic Money Transfer Levy (EMTL) is not a novel concept. Introduced under the Finance Act of 2020, it replaced the Stamp Duty on electronic transfers. While the law has been in effect for some time, this recent directive sharpens its implementation, requiring financial institutions to charge and remit the levy on every electronic inflow of ₦10,000 or more.
The FIRS asserts that the policy is part of broader efforts to bolster government revenue. According to the agency’s spokesperson, “The EMTL is crucial for funding public services and infrastructure in a fiscally challenging environment.”
Critics, however, view the timing as suspect. Coming amid an economic downturn and persistent inflation, many believe the levy will exacerbate financial hardships for ordinary Nigerians, especially small business owners who rely heavily on electronic transactions.
Public Backlash: “A Tax on the Poor?”
Social media platforms have erupted with criticism since the announcement. Many argue that the levy disproportionately impacts low-income earners, for whom ₦50 represents a significant burden.
“This is a classic case of punishing the majority for the failures of the few,” says Taiwo Oladipo, an economist and public policy analyst. “While the wealthy can easily absorb such costs, the average Nigerian, struggling to make ends meet, will feel the pinch.”
Others express frustration over the lack of transparency in how such levies are utilized. “We pay taxes, levies, and surcharges, but where is the development?” asks a Lagos-based entrepreneur.
The Fintech Perspective: A New Operational Hurdle
Fintech companies like Opay and Moniepoint have revolutionized financial inclusion in Nigeria, offering seamless digital payment options to millions. But the EMTL poses new operational challenges.
An insider at a leading fintech firm, speaking on condition of anonymity, revealed that adapting their systems to comply with the levy requires significant investment. “It’s not just about deducting ₦50; it’s ensuring accurate tracking, reporting, and remittance. This is a logistical and financial burden for us, too.”
Despite these challenges, many fintechs are focusing on minimizing the levy’s impact on customer satisfaction, with some exploring strategies to offset costs through promotions or loyalty programs.
Broader Implications for Nigeria’s Cashless Economy
Nigeria’s drive toward a cashless economy has gained momentum in recent years, with digital payments becoming the norm. However, policies like the EMTL risk undermining this progress by incentivizing a return to cash transactions to avoid fees.
“Tax policies should encourage growth, not deter it,” argues Professor Chinedu Nwosu, a tax policy expert at the University of Lagos. “The government must balance revenue generation with fostering financial inclusion and economic development.”
Way Forward: Striking a Balance
While the EMTL aims to address fiscal deficits, its implementation raises important questions about equity, timing, and economic impact. To mitigate public outcry, experts suggest that the government should:
- Improve transparency in the use of collected levies.
- Consider exemptions for small-scale transactions.
- Launch public awareness campaigns to clarify the levy’s purpose and benefits.
