Recall that the Electronic Money Transfer levy was introduced in Nigeria through the Finance Act in 2020, replacing the previous stamp duty on electronic receipts or Electronic transfers.
The Electronic Money transfer levy is a singular one-off charge of N50 on electronic receipt or transfer of money deposited in any bank or financial institution on any type of account on the sum of N10,000 or more.
Just recently, the federal government of Nigeria disclosed its projection to generate the sum of N136.3 billion as revenue from Electronic Money transfers to be paid by bank customers in 2023. This is based on a projected 2.7 billion volume of eligible online transfers in the year.
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The government disclosed that Electronic Money transfer charges generated N97.3 billion for the government in April 2022, which was the highest amount generated from Electronic Money transfers in the country since its adoption in 2020.Revenue generated from electronic money transfers made up 14.29% of the total N680.78 billion generated by the federal government in the month of April.
The budget office of the federation which disclosed its projections in its 2023-2025 medium-term expenditure framework and fiscal strategy paper released on Friday, stated that the recently approved regulations given by the administration of the electronic money transfer levy, is expected to boost collections of the revenue.
To ensure that it meets its projected target revenue from Electronic Money Transfer, the federal government disclosed that it would ensure proper monitoring of banks and other financial institutions to conduct reconciliation and to ensure deduction and remittance of the levy.
Although the government did not realize its projected revenue of 500 million naira in 2021, as it only realized the sum of N111.84 billion at the end of the year. It might interest you to know that since the introduction of Electronic Money Transfer levy, Nigeria has generated not less than N129.62 billion.
One might ask why the government is imposing a levy on Electronic Money transfers. Well, the revenue derived from the EMT levy is shared based on the derivation and distributed at 15% to the federal government and the federal capital territory (FCT), 50% is also allocated to the state governments, and 35% to the 774 local governments in the country.
Electronic Money Transfer levy is a source of revenue for most countries in Africa, as it is used to boost the nation’s economy. In Africa, East African country Uganda, was the first to impose this levy in Africa in July 2018, followed by Zimbabwe in October 2018.
The Electronic mobile transfer levy has been termed “lazy tax” due to the fact that the federal government does nothing to learn it. After its adoption in Nigeria in 2020, it was followed by widespread criticism.
Some individuals and experts disclosed that people who use transfer channels are over-levied, as they have to pay a maintenance fee, and transfer fee, which will discourage a lot of individuals from using electronic channels.
Also, they cited that this levy will impose too much burden on the citizens as they are already faced with a myriad of problems. With the EMT levy, it has been disclosed to discourage more people from using banks and their services which will deepen the financial exclusion of many Nigerians.
On the flip side, with the influx of Fintech startups in the country, a lot of people will not hesitate to embrace the digital mode of payments due to its ease of use and convenience, which will no doubt still generate money for the federal government.