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FIRS asks bank customers to pay forex transactions levy

The Federal Inland Revenue Service (FIRS) has directed commercial banks to debit domiciliary accounts customers' accounts for Electronic Money Transfer Levy (EMTL).

The N50 levy will be taken from account holders for foreign currency transactions done in the last three years, and henceforth.

The banks, which communicated the policy shift in emailed note to their customers, said the levy covered transactions done between 2021 and 2023. Transactions done on January 2, 2024 and henceforth were also included on the levy list.

In a message sent to customers, the banks noted that FIRS directive was backed by the Finance Act 2020 and Stamp Act 2004.

In the note entitled: Remittance of Electronic Money Transfer Levies (EMTL) on foreign currency transactions, Polaris Bank said:  "Please be informed that the Federal Inland Revenue Service (FIRS) issued Banks with a notice to deduct and remit Electronic Money Transfer Levy (EMTL) on foreign currency (Fcy) transactions which is in line with the Finance Act 2020 and Stamp Act 2004."

"In compliance with the instructions from the Federal Inland Revenue Service- FIRS, the bank will commence the deduction of N50 on all foreign currency transactions inflows which is equivalent to N10,000 and above from January 2nd 2024 and remit same to the Federal Government".

"In furtherance of compliance with the notice from the FIRS, EMTL deductions of N50 would also be deducted on previous foreign currency inflows (FCY) transactions that was executed from January 1st 2021 to December 2023, within the threshold as communicated earlier," the notice said.

Likewise, First Bank of Nigeria, said the deductions would start promptly and be forwarded to the FIRS.  “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," it said in note to customers.

Union Bank 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 wrote: “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".

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 two years, the banks had failed to make the deductions, creating huge backlogs for account holders.