The Federal Inland Revenue Service (FIRS) has issued a directive to banks, instructing them to initiate the deduction of N50 as the Electronic Money Transfer Levy (EMTL) from foreign currency transactions, effective January 2021.
The EMTL is a one-time charge of N50 applicable to the electronic receipt or transfer of money in any commercial money bank or financial institution for any type of account, involving sums of N10,000 and above.
According to the FIRS, revenue generated from the EMTL will be distributed among the three tiers of government through the Federation Account Allocation Committee (FAAC).
Banks have notified customers of this directive through separate emails, citing the implementation of section 48 of the Finance Act of 2020 and section 89a (1) of the Stamp Duty Act of 2004.
Financial institutions are required to apply these deductions to foreign currency transactions carried out between January 1, 2021 (the effective date of the Finance Act) and December 2023.
**Compliance Begins: Access, First, Polaris Banks Lead the Way**
Major banks, including Access Bank, First Bank, and Polaris Bank, have commenced compliance with the FIRS directive.
Access Bank, in a notice to customers, stated that the EMTL deduction for international transactions from 2021 to 2023 would start from January 31, 2024. The bank emphasized that the charge of N50 (FCY equivalent) would now apply to foreign currency inflows of N10,000 and above.
Polaris Bank, aligning with the FIRS directive, announced that compliance would begin from January 2, 2024. Deductions of N50 will be made on previous foreign currency transactions executed over the past three years.
First Bank also informed its customers about the levy, stating that the deduction would apply to recipients of electronic receipts or transfers of N10,000 or more on any type of account. The bank assured customers that the deduction would start immediately and be remitted to the FIRS as mandated.
Several other commercial banks, including Stanbic IBTC, Union Bank, and Guaranty Trust Bank (GTB), have recently confirmed their adherence to the FIRS policy.
This move aligns with President Bola Tinubu’s goal of achieving a $1 trillion economy by 2026. Minister of Finance, Wale Edun, emphasized the importance of streamlining and expanding the tax net to meet the government’s revenue targets during his address to lawmakers in December 2023. Edun also advocated for a centralized revenue collection system led by the FIRS.