Effective September 9, 2024, Nigerian fintech companies will begin deducting a N50 Electronic Money Transfer Levy (EMTL) from every inflow of N10,000 or more. Fintech platforms such as Moniepoint and OPay have already begun notifying their customers about this upcoming change. This new fee is in compliance with a directive from the Federal Inland Revenue Service (FIRS).
Expanded Levy Scope
Previously, the EMTL was applicable only to commercial banks. Moving forward, fintech platforms are now mandated to collect this levy on behalf of the federal government. This change signifies the end of some fintechs’ previously free banking services.
Understanding the EMTL
The EMTL is a one-time charge of N50 applied to electronic transfers or receipts within Nigeria. The levy applies to all electronic fund transfers conducted through licensed banks and financial institutions in the country, with a few exceptions:
- Transfers below N10,000
- Transfers to one’s own account
- Electronic transfers between accounts held by the same owner within the same bank
Introduced under the Finance Act 2020, the EMTL aims to encourage electronic fund transfers in Nigeria. The revenue collected from this levy is distributed as follows:
- 15% to the Federal Government
- 50% to state governments
- 35% to local governments
Recent Developments
In December of the previous year, the FIRS directed deposit banks to begin deducting and remitting the EMTL on foreign currency (FCY) transactions in addition to local currency transactions. Before this, the N50 charge was only applicable to local currency transactions exceeding N10,000. Starting January of this year, banks began applying the EMTL retroactively to foreign currency transactions from 2021 to 2023 as directed by the tax authorities.
Reactions and Calls for Reconsideration
In response to the implementation of the new levy, Oladimeji Uthman, Senate Clerk of the National Association of Nigerian Students (NANS) National Headquarters, has called on the FIRS and the Federal Government to reconsider and reverse the EMTL. Uthman suggested that the government should explore alternative revenue sources, such as investments in agriculture, quality education, infrastructure development, and job creation, rather than imposing additional financial burdens on students and the general populace.