By Adewale Ajayi, Partner and Head of Tax, KPMG in Nigeria
From January 2026, the fifty naira Electronic Money Transfer Levy introduced under the Finance Act 2020 changed hands in a quiet but consequential way, because under the Nigeria Tax Act 2025 the charge, now formally reclassified as stamp duty, is deducted from the sender of every qualifying electronic transfer of ten thousand naira or more rather than from the recipient as before. Neither the rate nor the threshold has moved, which means the change that matters most is who now sees it, and for the millions of Nigerians who transact through mobile money wallets rather than through conventional bank accounts, that change will be felt sooner and more sharply than most.
The reason has a great deal to do with where this levy is now being collected. The enforcement drive that roughly doubled EMTL collections between 2024 and 2025 extended the charge decisively to the fintech and mobile money platforms, which are precisely the channels that brought into the financial system those Nigerians whom conventional banking had never reached. Wallet users tend to transact in small amounts and at high frequency, moving money several times a week rather than once or twice a month, so a charge that is now visible at the moment of authorisation will register with them repeatedly in a way it never did while it was being quietly deducted from someone else’s balance.
The fifty naira itself is modest, and the difficulty lies in its flat structure, since fifty naira on a transfer of ten thousand naira amounts to a charge of half a per cent, while fifty naira on a transfer of one million naira amounts to a charge of five thousandths of a per cent. Wallet transactions tend to sit towards the lower end of that range, which makes the levy regressive by design, falling hardest in proportional terms on the users with the least capacity to absorb an additional cost and the most realistic fallback option in cash.
The behavioural consequence deserves more attention than it has so far received, because a visible and repeated charge shapes conduct far more powerfully than an invisible one of identical size. For a small trader making a dozen qualifying transfers in a week, the levy is no longer background noise, it is a running cost they can watch accumulating and one they may reasonably begin looking for ways to avoid, whether by splitting payments below the threshold, by transacting less often, or by reverting to cash altogether. Each of those responses erodes the financial inclusion gains that mobile money delivered in the first place, and each of them narrows the very base the levy was designed to broaden.
Nigeria has already seen how quickly a poorly calibrated tax on digital transactions can unravel, most recently when the cybersecurity levy announced at 0.5 per cent in May 2024 was suspended within two weeks under sustained public and parliamentary pressure. The EMTL has not unravelled, and on current Budget Office projections it is expected to continue growing through 2028, which is exactly what makes the design question urgent rather than academic. A revenue line of that scale, resting on a base of very small and very frequent transactions, is considerably more sensitive to behavioural change than its projections tend to assume.
One gap in the exemptions should be closed whatever else changes, since transfers between a customer’s own accounts at the same bank attract no duty while the same movement between two institutions does, so topping up one’s own wallet from one’s own bank account with ten thousand naira or more costs fifty naira for money that has not changed hands. Such a transfer cannot represent payment for anything, so same owner transfers across banks, fintechs and platforms should be exempt, and the administrative challenge of verifying common ownership is easily met through the Bank Verification Number or the National Identification Number.
None of this argues that Nigeria should abandon the levy, since it generates meaningful non oil revenue and the digital economy is a legitimate part of the tax base. The principles that Nigeria’s National Tax Policy commits to on paper, equity, simplicity and low compliance cost, point toward a design more carefully calibrated than a flat charge at a fixed threshold, and either a graduated structure or a materially higher threshold exempting the smallest qualifying transfers would preserve the bulk of the revenue while removing the regressive edge that currently falls on the wallet users least able to bear it. No country has ever taxed itself to prosperity, and now that every Nigerian sending money sees this charge at the moment they authorise it, the design will face scrutiny it never attracted before. Getting the calibration right before the behavioural effects appear in the transaction data would be very much cheaper than correcting it afterwards.