Representatives are calling on CBN to suspend the cybersecurity levy, citing ambiguities in the circular

Members of the House of Representatives have demanded that the Central Bank of Nigeria (CBN) temporarily withdraw the circular directing banks to begin implementing the 0.5% cyber security levy, describing it as “ambiguous”.

The response followed an urgent request to halt and revise the implementation of the cybersecurity levy. It was introduced in the House of Representatives by Kingsley Chinda.

The House said the CBN should withdraw the original circular and “issue a more understandable one.”

Honorable Chinda had drawn the attention of the House of Representatives to several interpretations of the CBN policy that contradict the provisions of the Cybersecurity Act.

The House of Representatives expressed concerns that the law could be misimplemented unless immediate steps are taken to address the issues surrounding the interpretation of the CBN Policy and the Cybersecurity Act.

Consequently, the House of Representatives directed the CBN to withdraw the existing ambiguous circular and issue a clear circular consistent with the letter and spirit of the Cybercrimes (Amendment) Act, 2024.

The Green Chamber also mandated its Committee on Banking Regulation and the Committee on Banks and Other Ancillary Institutions to effectively run the CBN.

This followed the adoption of a motion of urgent public importance moved by the House Minority Leader, Hon. Kingsley Chinda (PDP Rivers) and 359 others.

What the legislature says

In submitting the application, Chinda noted that the CBN issued a circular to all commercial, commercial, non-interest and payment service banks, other financial institutions, mobile money operators and payment service providers (“CBN Circular”) dated May 6, 2024, informed Nigerians of a proposed 0.5% levy on electronic transactions under Section 44(2)(a) of the Cybercrimes (Amendment) Act, 2024.

He highlighted that Section 44(2)(a) of the Cybercrimes (Prohibition, Prevention, etc.) (Amendment) Act, 2024 provides: “a levy of 0.5% (0.005), equivalent to half a percent of all electronic transaction values ​​of companies listed in the Second Schedule to the Act.” to be paid into the Cybersecurity Fund.

“Further states that the entities to which the said Section 44(2)(a) applies are listed in the Second Schedule to the Cybercrimes Act as follows: a) GSM service providers and all telecommunications companies; b) Internet service provider; c) banks and other financial institutions; d) Insurance companies and e) Nigerian Stock Exchange.

“Concerned that the CBN Circular requires all banks, other financial institutions and payment service providers to implement the Cybercrime Act by collecting and remitting the levy at the place of electronic transfer as “Cybersecurity Levy”.

“Further concern is that the wording of the CBN Circular leaves the CBN policy open to multiple interpretations, including the fact that the levy on bank customers, d the Cybercrimes Act, which specifies the companies that should be taxed accordingly,” Chinda said.

Backstory

On Monday, May 6, the CBN issued a circular directing banks to initiate the deduction of a cybersecurity levy of 0.5% to be remitted to the Office of the National Security Adviser (ONSA) account should.

• The deduction and imposition of the cyber security levy follows the enactment of the 2024 Cybercrime (Prohibition, Prevention, etc.) Amendment Act, 2024, which mandates a deduction of 0.5% of the value of all electronic transactions for the National Cyber ​​Security Fund, which is managed by ONSA.
• The circular noted that the deduction would be called “Cybersecurity Levy” and relevant financial institutions should start deductions within two weeks of the circular.
• Further, the apex bank stated that the penalty for default is in line with the amended Cybercrime Prohibition and Prevention Act, which provides for a fine of at least 2% of the turnover of the defaulting company, among other penalties.
• The new policy is expected to come into effect in two weeks, according to a circular jointly signed by Chibuzor Efobi, director of payment system management at CBN, and Haruna Mustafa, director of financial policy and regulation.