Nigeria’s Digital Tax Net Set to Expand, Targeting N230 Billion in 2025

The Nigerian federal government is poised to increase digital tax revenue, projecting N230 billion in collections by 2025 through an expanded Electronic Money Transfer Levy (EMTL) that now includes fintech operators.

Initially introduced in the 2020 Finance Act, the EMTL imposes a N50 charge on electronic transfers of N10,000 and above. In September 2024, the government extended the levy to prominent fintech platforms like Moniepoint, Opay, and Palmpay, targeting a sector that processed N46.91 trillion in transactions during 2023.

The move comes on the heels of impressive revenue performance, with the EMTL generating N180.31 billion in 2023, exceeding its target by 29.45 percent. By August 2024, collections had already reached N133.22 billion, positioning the government to meet its N175 billion annual target.

The digital financial landscape has been transforming rapidly. Cashless transactions surged from N395.38 trillion in 2022 to over N600 trillion in 2023, with mobile money transactions experiencing a nearly 30-fold growth over five years.

Leading fintech platforms Opay and Palmpay boast a massive 65 million user base, while Moniepoint processes over $17 billion monthly for more than 10 million customers. The government aims to escalate annual levy revenue to N305 billion by 2027.

However, the expanded levy is not without consequences. Point of Sale (PoS) operators have already begun increasing transaction charges to offset new costs. Customers report withdrawal fees rising from N200 to N300, sparking widespread frustration.

Industry experts warn that while the levy will broaden the tax net, it might diminish the competitive advantage of neobanks known for low or zero transfer fees. Consumers, particularly those relying on PoS services, are expected to bear the brunt of these additional costs.