• Monday, May 27, 2024
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NACCIMA urges suspension of cybersecurity levy amid concerns over economic impact

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The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has urged the Central Bank of Nigeria (CBN) to suspend its directive on the implementation of a 0.5% cybersecurity levy on all eligible electronic transactions.

Dele Kelvin Oye, National President, NACCIMA said that the Bank’s action is another stealth tax on the private sector, citing potential detrimental effects on the nation’s economy.

The call for suspension comes amidst growing concerns over the levy’s impact on financial inclusion efforts, particularly in remote or underserved regions where electronic banking transactions play a pivotal role.

In a statement signed by the Association’s president, NACCIMA expressed apprehension regarding the imposition of the levy, which coincides with the imminent release of recommendations from the Presidential Fiscal Policy and Tax Reforms Committee.

Read also: With Cybersecurity Levy, it will cost about N135 to transfer N10,000

The association highlighted its disappointment, as assurances were previously given that the tax system would be streamlined to encompass no more than ten significant types. However, he said the introduction of this new levy raises fears of hindering Nigeria’s competitiveness in the Ease of Doing Business rankings, deterring foreign direct investment, triggering capital flight, and exacerbating talent drain in the technology sector.

Emphasizing the urgency of the matter, NACCIMA called upon the Central Bank of Nigeria and other relevant authorities to reconsider the implementation of the cybersecurity levy. The association urged for a temporary suspension of the levy to facilitate a comprehensive review and consultation process with key stakeholders. Such actions, NACCIMA argues, are imperative to ensure clarity in implementation and alignment with broader fiscal policy and tax reform objectives aimed at fostering economic growth and competitiveness.

The association also believes that the burden of tackling a hybrid of security challenges like terrorism, banditry and other internal conflicts in Nigeria, should be shared across the current security and defense budget since the security and defense sectors are already substantial recipients of the national budget.

“cybersecurity is firstly a transnational issue which requires cooperation between international security agencies and requires highly skilled and experienced human resources.”

Despite the apprehensions raised, NACCIMA reiterated its commitment to fostering constructive dialogue and collaboration with the government to find a balanced approach that addresses cybersecurity threats while safeguarding the Nigerian economy and promoting a conducive environment for business and investment.

“While NACCIMA recognizes the importance of bolstering our national cybersecurity infrastructure, the blanket imposition of this levy without a limit raises significant issues that warrant a thorough review and reconsideration by the authorities.

“With over 600 trillion naira (NIBSS 2023) in transactions annually, the projected revenue from this levy is considerable. Therefore, we expect transparency in the application of these funds through clear performance metrics essential to justify the additional levies. For this reason, we must ask: what proportion of ALL online transactions are fraudulent transactions? In what way will this levy counteract such transactions? With incidence rates significantly lower than the levy rate, there is a mismatch that needs to be addressed. We will therefore advise a maximum levy cap of Five Hundred (500 )naira. It is also a fact that other methods exist to reduce local online cyber security risks through professional private sector experts.

“the allocation and administration of the levy funds are critical. The organized private sector must be involved in the oversight and management of these funds to ensure efficiency and effective use of the levy for public and private sector services, akin to an estate service charge model. Without this, there is a risk of misapplication and lack of accountability.

“the introduction of this levy may be in contravention of the constitutional provision mandating all revenues to be deposited into the consolidated fund, which can only be utilized following appropriations by the National Assembly. We await further guidance on this position.”