KPMG, a global advisory firm KPMG has raised concerns about the newly implemented cybersecurity levy in Nigeria.
While acknowledging the importance of cybersecurity funding, KPMG argues that the current economic condition makes it a bad time to introduce this additional burden on businesses and individuals.
The Central Bank of Nigeria (CBN) recently mandated a 0.5% levy on electronic transactions to fund cybersecurity initiatives. However, KPMG highlights the lack of a cost-benefit analysis for this levy, particularly considering estimates that it could generate N3 trillion annually. The firm pointed to the need for transparency in how these funds will be utilized.
KPMG has also criticized the timing of the levy’s implementation, stating that higher taxes don’t necessarily lead to sustainable growth. The firm suggests that the government should focus on reforms addressing revenue leakages and responsible spending practices instead of introducing new levies.
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Highlighting that the levy could discourage electronic transactions and hinder business growth, especially given the current economic challenges, KPMG noted that businesses may resort to alternative methods to avoid the levy, potentially impacting financial inclusion efforts.
The advisory firm urges the government to reconsider the implementation of the cybersecurity levy and prioritize reforms that address existing problems. A gradual phasing-in of any tax measures to minimize economic disruption was advocated for.
KPMG is driving existing public resistance to the levy. The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) had previously called for a cap on the levy amount to lessen the burden on the private sector.
KPMG points to the need for a long-term approach to cybersecurity funding. While recognizing the importance of protecting against cyber threats, the need to advocate for a strategy that balances security needs with economic realities is necessary.
