Banks Commence Deduction of Electronic Money Transfer Levy on Foreign Currency Transactions
Nigerian banks have started implementing the Electronic Money Transfer Levy on foreign currency transactions made by their customers. This action is in response to the directive issued by the Federal Inland Revenue Service (FIRS), which instructs deposit money banks to deduct and remit the Electronic Money Transfer Levy (EMTL) on foreign currency (FCY) transactions as stated in the Finance Act 2020 and Stamp Act 2004.
The EMTL levy is applicable to money transfers made through any type of account in financial institutions. Customers have already been informed about this new development by their respective banks.
New information has emerged regarding the deduction of N50 for every foreign currency transaction equal to or exceeding N10,000 by bank customers. These deducted amounts will be sent to the relevant tax authority. The bank has clarified that the EMTL deductions will be applicable to qualifying transactions executed from the first week of January 2021 to the last week of December 2023.
The introduction of the EMTL levy serves as an additional source of revenue for the federal government and has previously been implemented in various economic sectors, including energy.
In an effort to boost revenue generation, the federal government included the EMTL in the Finance Act of 2020, which amended the Stamp Duty Act. This was done to take advantage of the increasing use of electronic funds transfer in the country.
The EMTL is a one-time charge of N50 on electronic receipts or transfers of money deposited in any commercial bank or financial institution, regardless of the type of account, for sums of N10,000 and above. Some banks like Union Bank and Stanbic IBTC have already sent notices to their customers informing them of the commencement of the deductions. In the message sent by Union Bank, it informed its customers that ““In line with this directive, we would like to inform you that we will start deducting fifty naira (N50.00) on all foreign transactions that meet this threshold, along with the existing levy on qualifying naira transactions. The deducted amount will be remitted to the relevant tax authorities.”
