Cybersecurity Levy Unjustifiable, Ill-timed – KPMG

A global audit and tax firm, KPMG, has said the federal government’s 0.5 percent cybersecurity levy is unjustifiable and ill-timed, given the current economic realities.

In a commentary on the levy over the weekend, KPMG said no country could tax itself to prosperity, and higher taxes would not lead to sustainable growth in the nation.

KPMG said the levy was not limited to financial institutions but also payable by GSM service providers and all telecommunication companies, internet service providers, insurance companies and the Nigerian Stock Exchange.

It hinted that the regulators of these other businesses might issue their implementation guidelines soon and warned against the policy’s unintended consequences.

It stated, “Undoubtedly, Nigeria faces significant revenue challenges. This has, therefore, constrained and continues to constrain the country’s capacity for achieving sustainable growth. Given this context, the government may go to any length to mobilise the required revenue.

“However, research has shown that higher taxes do not lead to sustainable growth. In fact, no country can tax itself to prosperity. Perhaps in recognition of this, the current administration and the Presidential Committee on Fiscal Reforms have often emphasised that the government will not introduce new taxes.

“Though the cybercrime levy is not new, as it has existed since 2015, the question is why implement it now, given the prevailing economic challenges? The timing of any reform is essential to its success. This underscores the current public resistance to the implementation of the levy.

“This is certainly not the right time to implement this levy. Hopefully, the National Insurance Commission (NAICOM) and the Nigerian Communications Commission (NCC) will consider this before introducing their own guidelines regarding those businesses under their purview.”

KPMG reckoned that the key objective of the cybersecurity levy was to ensure that dedicated and adequate funding was available to address the growing threats of cyber-attacks.

The firm said although various reports had indicated that the government would raise about N3 trillion annually from the levy, the cost and benefit analysis was not formally presented to the public.

KPMG observed that it was always critical that the enactment of any tax or levy be accompanied by the tax expenditure statement to provide information as to whether the benefits of such tax or levy outweighed its cost.

Meanwhile, President Bola Tinubu had ordered the suspension of the controversial levy following outrage from Nigerians amid the harsh economic realities in the country.