Taxes & Tariffs | |
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Friday, November 29,
2019 /10:19 AM / By CSL Research / Header Image
Credit: African Entrepreneur
News reports say the Federal Government has reviewed
the N50 stamp duty charge on electronic payments in the country following
public outcry and a reported drop in the number of Point of Sale (POS)
transactions. According to reports, the new financial Bill now states that the
N50 charge would be imposed on transactions above N10,000 compared with N1,000
that had previously taken effect across the country in September.
In a circular released by the Central Bank in
September, the apex bank authorised banks to unbundle merchant settlement
amounts and charge applicable taxes and duties on individual transactions as
stipulated by regulators. This translates to stamp duty payment on individual
transactions that occur on POS, rather than on aggregate transactions previously.
The merchant service charge was also reviewed downward from 0.75% capped at
N1,200 (US$3.33) to 0.5% capped at N1,000.
Many merchants across the country have swiftly
introduced a N50 charge on POS payments and this has elicited backlash from users
with many now angrily deciding to pay for their goods in cash. A few merchants
interviewed noted that the number of POS transactions have dropped
significantly since the introduction of the stamp duty which we believe
informed the decision by the CBN to review the charge.
Asking consumers to pay an extra N50 if they use the
POS machine as a means of settlement appears counter effective to CBN's
cashless policy agenda in our view. In Septemer, the CBN in a circular stated
that daily withdrawals and deposits by individuals that exceed N500, 000
attract a 2% charge on the excess deposits and 3% charge on the excess
withdrawals while daily withdrawals and deposits by corporates exeeding N3m
attract a 3% charge on the excess deposits and a 5% charge on excess
withdrawals. This, according to the CBN noted was aimed at reducing the amount
of physical cash in circulation and encouraging more electronic-based
transactions. Discouraging cash-based transactions, and at the same time
imposing multiple charges on electronic based transactions appears counter
productive.
While we see the positive of increased government
revenue from the introduction of the stamp duty charge, we believe it could be
a drag on CBN's financial inclusion drive. Nigerians, especially bank customers
complain that they are made to face several charges by the financial
institutions. These include N52.50 monthly card maintenance fee; N65 after
third withdrawal on remote-on-us Automated Teller Machines, N4 for SMS alerts,
N52 deduction in electronic transfer service. Many banks also charge fees for
hardware token and for one-time pin SMS charge. Introducing stamp duty on POS
transactions may not be ideal to achieve CBN's financial inclusion goals as
well as support a cashless economy, thus we feel the revision is a welcome
development.
Related News
1.
CBN
Approves Charges On Withdrawals And Deposits; Unbundles Charges on Electronic
Merchants
2.
CBN
Amends Guide To Charges By Banks And Other Financial Institutions In Nigeria
3.
Financial
Services Agents Call On CBN To Address Stamp Duty Charges
4.
RMAFC
Set to Audit Deposit Money Banks Over Stamp Duty Collections
5.
ASHON
Seeks The Abolition Of Contract Stamp Duty In Nigeria's Capital Market
6.
Stamp
Duty Under the Banking System
7.
N50
Stamp Duty: Banks begin execution, lists exemptions but still have many issues
unanswered
8.
Controversy
trails stamp duty collection in stock market
9.
Five New Fees Chargeable within the Nigerian Financial
Market - Jan 25, 2016
10. CBN Introduces Negotiable Current Account Maintenance Fee - Jan 22, 2016
11.
What You Should Know About the Stamp
Duties Act - Jan 21, 2016
12. CBN directs DMBs to charge N50 per
transactions in accordance...Jan 20, 2016