The federal government of Nigeria has directed commercial banks to debit customers’ bank accounts, which will then be remitted to the government.
The deduction is for the Electronic Money Transfer Levy (EMTL) backlog on old foreign currency transactions between 2021 and 2023.
Reason For The Deductions
In December 2023, FIRS mandated commercial banks to deduct N50 electronic money transfer levy on every N10,000 foreign currency transaction and remit it.
This followed the implementation of the Finance Act 2020 Section 48 and Stamp Act 2004 Section 89A (1) as amended, which imposes a levy known as the Electronic Money Transfer Levy (EMTL) on recipients of any electronic receipts or transfers of N10,000 or above on any type of account in a deposit money bank or financial institution.
For 2 years, the banks have failed to make the deductions and have been owing the federal government.
Banks Issues Notice To Customers
With respect to this, some banks have issued a notice to their customers on the immediate dedication of the levy.
In a notice titled ‘Important Notice: Electronic Money Transfer Levy Deductions Begin on Foreign Currency Transactions,’ First Bank of Nigeria announced that deductions would start promptly and be forwarded to the FIRS.
The bank said. “In compliance with this directive, a deduction of Fifty-naira (N50) only will be applied to every foreign currency (FCY) transaction with an equivalent amount of N10,000 and above.”
Union Bank also said it would begin to deduct the N50 electronic transfer levy for all international transactions from January 1, 2024. Stanbic IBTC Bank, in March 2023, announced the dedication of N50 levy on electronic money transfers from Domiciliary accounts.
Also, Access Bank said: “We write to inform you of the Federal Inland Revenue Service (FIRS) notice to all banks, in line with the Finance Act 2020 and Stamp Act 2004, to remit the Federal Government Electronic Money Transfer Levy from foreign currency (FCY) inflows.
“Previously, the Electronic Money Transfer Levy was solely applicable to accounts receiving electronic deposits of N10,000 and above or its equivalent.
“However, starting January 2, 2024, the deduction will be extended to FCY inflows equivalent of N10,000 and above, incurring a charge of N50 (FCY equivalent).”