CEM REPORT, FINANCE| The Nigerian business community is up in arms against the recently implemented cybersecurity levy, calling it another burden on top of already numerous taxes that threaten to derail economic growth.
The Centre for the Promotion of Private Enterprise (CPPE) issued a statement signed by its CEO, Dr. Muda Yusuf, expressing strong reservations about the levy and urging its suspension for stakeholder consultation.
Yusuf argued that the cybersecurity levy, in its current form, will inflict hardship on Nigerians and discourage investment.
“The private sector and Nigerians, in general, are still reeling from the recent economic reforms,” Dr. Yusuf stated. “Inflation remains a concern, living costs are high, and businesses are struggling with elevated operating and production costs while consumer spending power remains weak. This is simply not the right time to impose an additional levy on both businesses and citizens.”
Tax Overload
Nigerian businesses are already grappling with a complex and heavy tax system. Dr. Yusuf listed existing federal taxes that businesses contend with, including:
Company Income Tax (CIT)
Tertiary Education Tax (TETFund)
Value Added Tax (VAT)
National Information Technology Development Agency (NITDA) levy
Stamp Duty
National Agency for Science and Engineering Infrastructure (NASENI) Levy
Police Trust Fund Levy
These existing taxes, coupled with proposed levies such as the National Youth Service Corps (NYSC) Levy and Tertiary Health Levy, paint a picture of an overburdened business landscape.
Cybersecurity Levy vs. Cashless Policy
The CPPE further questioned the projected revenue from the cybersecurity levy. Yusuf used data from the Nigeria Interbank Settlement System (NIBSS) on e-payment transactions in 2023 (N600 trillion) and the 0.5% levy rate to arrive at an estimated revenue of ₦3 trillion. This figure, he pointed out, surpasses the entire budgetary allocation for infrastructure in the 2024 Appropriations Act.
Yusuf also highlighted a potential contradiction between the cybersecurity levy and the Central Bank of Nigeria’s (CBN) cashless policy drive. He expressed concern that such levies could discourage electronic transactions and push people back towards cash-based methods.
CPPE Calls for Dialogue
The CPPE CEO emphasized the need for open dialogue with stakeholders before implementing such levies. He called for a suspension of the cybersecurity levy and a thorough consultation process that considers:
The cumulative impact of existing and proposed taxes on businesses and citizens.
More efficient and targeted ways to fund cybersecurity initiatives.
The potential impact on the cashless policy and financial inclusion efforts.
Read Also: Not All Transactions Feel the Sting: Exemptions in Nigeria’s New Cybersecurity Levy
If You Ask Me
The controversy surrounding the cybersecurity levy underscores the need for broader tax reform in Nigeria. Businesses require a more predictable and streamlined tax environment to thrive and contribute to economic growth.
Yusuf’s statement resonates with the Presidential Committee on Fiscal Policy and Tax Reforms’ vision for a simplified tax system. Achieving this vision requires a collaborative effort from policymakers, business leaders, and citizens to create a tax structure that fosters economic prosperity without stifling growth.
The cybersecurity levy serves as a catalyst for a much-needed conversation about Nigeria’s tax landscape. The government must prioritize open dialogue and collaboration with stakeholders to ensure that policies, like the cybersecurity levy, are implemented in a way that safeguards national security while enabling businesses to flourish and contribute to a vibrant and inclusive Nigerian economy.
