Reconsider implementation of cybersecurity levy, says KPMG
KPMG Nigeria has advised the federal government to reconsider the implementation of the cybersecurity levy due, adding that higher taxes do not lead to sustainable growth.
The multinational professional services network stated this while reacting to the recent directives by the Central Bank of Nigeria (CBN) mandating deposit money banks (DMBs) to start charging a 0.5 percent cybersecurity levy on electronic transactions, in line with the Cybercrime Act 2024 as amended.
The firm added that although the idea was not new, it was unjustified under the prevailing economic condition.
According to the firm, unintended consequences of any measure must be thoroughly evaluated before implementation.
“Undoubtedly, Nigeria faces a significant revenue challenge. This has, therefore, constrained, and continues to constrain, the country’s capacity for achieving sustainable growth,” KPMG said.
“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. Though the cybercrime levy is not new as it has been in existence since 2015, the question is why implement it now given the prevailing economic challenges?
“Hopefully, the National Insurance Commission (NAICOM) and the Nigerian Communications Commission (NCC) will consider this before introducing their guidelines with respect to those businesses under their purview.
“However, consideration must be given to the country’s prevailing economic conditions. The current economic climate does not justify its implementation now.”
The firm urged the federal government to focus on reforms that address revenue leakages and be financially prudent in the utilisation of public funds.
“Various reports have indicated that the government will raise about N3 trillion annually from the levy,” the firm said.
“However, there has been no formal presentation to the public of the cost and benefit analysis. It is always critical that the enactment of any tax or levy be accompanied by the tax expenditure statement to provide information as to whether the benefits of such tax or levy outweigh its cost.
“It is not sufficient to provide only the revenue projection, which is not certain as no details have been provided with respect to this; albeit there have been reports on how the money would be spent.
“There are many government agencies that have not been audited for years and nothing has happened! It is, therefore, critical that practical measures be put in place to ensure transparency and accountability.
“Government should focus on tax reforms that address revenue leakages and be financially prudent in the utilisation of public funds. Combining revenue-raising initiatives with responsible spending practices is essential for fiscal sustainability.”
The firm also raised concerns that businesses may resort to any measures to avoid the payment of the levy.
