By Adedapo Adesanya
Over the weekend, payment service bank users including OPay and PalmPay among others told their customers that from Monday, September 9, they would be charged N50 for Electronic Money Transfer Levy (EMTL) from every inflow of N10,000 and above. This has raised worries from many, who have lamented the cost implication of being charged that levy.
This development marks an end to years of freebies enjoyed by these customers, who before now can send as much as their daily limits without paying any fee compared to their traditional banks.
According to the different statements by these neo-banks, this deduction followed a directive by the Federal Inland Revenue Service (FIRS).
It is part of a push to raise revenue for the country and reduce borrowings by the federal government. Taxes are a viable revenue-generating mechanism amid dwindling revenue from crude oil sales.
In December 2023, the FIRS directed deposit money banks to deduct and remit Electronic Money Transfer Levy (EMTL) on foreign currency (FCY) transactions going forward and before that time, the N50 charge on transactions from above N10,000 was only applicable to local currency transactions.
For equivalent receipts or transfers carried out in other currencies, the levy will be charged at the exchange rates determined by the Central Bank of Nigeria (CBN).
The banks in January this year began the deduction of EMTL on old foreign currency transactions covering 2021 to 2023 as directed by the tax regulator.
This levy is, among others, primarily designed to generate revenue for the government. The Finance Act, 2019 amended various subsets of the existing tax and fiscal legislation at the time, including the Stamp Duty Act (SDA).
The Finance Act of 2023 stipulates that revenue accruing by the operation of EMTL shall be distributed to the three tiers of government based on derivation with the federal government receiving 15 per cent; state governments receiving 50 per cent and the local governments receiving 35 per cent of the EMTL realised.
There are however some exceptions to the payment that won’t charge the deductions – these include transfers under N10,000, money paid into one’s account, and money transferred electronically between accounts of the same owner within the same bank.
