Global audit and tax firm KPMG has criticized the federal government’s decision to implement a 0.5 percent cybersecurity levy, calling it unjustifiable and poorly timed in light of current economic challenges.
In a commentary released over the weekend, KPMG argued that no country could tax itself to prosperity and cautioned against the belief that higher taxes would lead to sustainable growth.
The firm highlighted that the levy would not only affect financial institutions but also GSM service providers, telecommunication companies, internet service providers, insurance firms, and the Nigerian Stock Exchange.
KPMG warned of potential unintended consequences of the policy and questioned the timing of its implementation amidst economic hardships. It emphasized that higher taxes do not guarantee sustainable growth and suggested that the current resistance to the levy’s implementation reflects public sentiment.
The firm emphasized the importance of timing in policy reforms and urged regulators such as the National Insurance Commission (NAICOM) and the Nigerian Communications Commission (NCC) to consider public concerns before issuing their implementation guidelines.
KPMG acknowledged the objective of the cybersecurity levy to address cyber threats but questioned the lack of formal presentation of cost-benefit analysis to the public.
The firm stressed the necessity of tax expenditure statements accompanying any tax or levy enactment to assess whether the benefits outweigh the costs.
Meanwhile, amidst public outcry and economic challenges, President Bola Tinubu has directed the suspension of the controversial levy, reflecting growing dissatisfaction with its implementation.