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CBN Cash Withdrawal Limits: Tax Implications on Individuals and MSMEs

As the Central Bank of Nigeria (CBN), rolls out new cash withdrawal limits, experts have said that the new policy comes with tax implications for individuals and Micro, Small and Medium Enterprises (MSMEs).

Although opinions are divided on the policy, what is clear is that there is a determined move by the CBN to entrench a cashless economy in Nigeria.

Cash withdrawal limits

Through the new policy, Automated Teller Machines (ATMs) will no longer load bank notes above N200.

Also, bank customers will no longer be able to withdraw more than ₦ 20,000 per day via the ATM and

₦100,000 per week via the same channel.

It also places the maximum cash withdrawal via the point of sale (POS) terminal at 20,000 daily.

Over-the-counter withdrawals too will be ₦100,000 for individuals, with a five per cent processing fee for amounts above the cap.

For corporate organisations, over-the-counter withdrawals will be limited to N500,000 and 10 per cent charge for amounts above the limit.

Tax implications on individuals and organisations

While the new policy, which kicks off in January 2023, is still trying to find its footing, many seem to be of the opinion that it is too severe for a shaky economy like Nigeria’s.

However, a tax expert and the Africa Tax Leader at PricewaterhouseCoopers (PwC), Mr Taiwo Oyedele, has reeled out the tax implications of the cash withdrawal limit announced by the CBN.

Oyedele, in a series of tweets, said that since many people will be forced to carry out transactions using electronic payments, small businesses that currently operate mostly on cash will become visible to the tax authorities.

According to him, this would trigger various tax obligations including income tax.

He said, “If your business is registered as a company, you may be liable to Company Income Tax (CIT), depending on your annual turnover (i.e., no CIT if your turnover is below ₦25m; 20 per cent if your turnover is between ₦25 and ₦100m; 30 per cent if your turnover is more than ₦100m) in addition to Education Tax at 2.5 per cent.

“If your business is not registered as a company then you will be liable to personal income tax based on graduated taxable income bands between 7 per cent and 24 per cent.”

The tax expert also stated that small businesses that hitherto had been evading Value Added Tax (VAT) may no longer be able to do that.

“All businesses are required to register for VAT and charge 7.5 per cent on their goods and services except those with annual turnover below ₦25m,” he said.

He further stated that all employees earning more than ₦30,000 per month are liable to the Pay as You Earn (PAYE) tax policy which must be deducted and paid to the tax authority by the employer on a monthly basis.

Businesses, he noted, may also be liable to other statutory contributions such as pension depending on your staff strength.

For individuals, Oyedele noted that “The more transactions you make electronically the more the tax authorities will get the intelligence to track your income and net worth making it easier to fish you out if you are a tax evader.”

Steps to avoid trouble

But what does this mean for the individual and the small business owner? Oyedele said that there are steps people can take to ensure that they are not causing any infractions.

Some of the urgent steps the tax expert encourages small business owners to take include:

  • Registering with the relevant tax authorities like the FIRS and the State Internal Revenue Service where they operate.
  • Opening a separate bank account for their business or dedicate one for that purpose if they already have a business account.
  • He also urged business owners not to mix business with personal transactions.

On what the government should do, Oyedele said, “Government on its part needs to sensitise the general public, especially small business owners, and the CBN should ensure a proper handshake with the fiscal authorities. For instance, the conditions for excess cash withdrawals could include a Tax Identification Number.”


Popular media business owner and former lawmaker, Ben Murray-Bruce, in his ‘Common Sense Series’, has urged the CBN to take certain steps before launching the policy.

In a video clip which he shared online, Murray-Bruce noted that there are many drawbacks to having a cashless economy, stating that the CBN officials probably didn’t think the new policy through.

Describing it as a seemingly hasty and ill-timed policy, he said that for it to be successful, the CBN should start by protecting the Nigerian people who will be forced to do more money transfers and use their cards to pay through the POS.

He said, “The CBN officials know just as well as we do that three out of every 10 transfers decline the transactions and at the same time, debit the account owners.

“They also know that only five out of 10 will have the transactions reversed in the 24-hour reversal period leaving the other five to go physically to the bank to complain and get subjected to a cumbersome process of filling forms and having to wait for as long as two weeks to get refunded. Why has the CBN not lived up to its responsibilities and penalised such banks?”

He also opined that the CBN’s regulations should include monitoring of deductions from customers for services never honoured.

“I will strongly campaign for customers whose transactions are declined and subsequently debited and are not reversed within 24 hours to get interests on the funds being withdrawn depending on the amount of money involved and the time spent waiting for the refund and the interest should rise every day.

“It is no different from defaulting on bank loans. And the banks are very familiar with this and the penalties that they impose. The Nigerian public should not be the ones to fund the ostentatious lifestyles of bank executives and banks in general who do absolutely nothing to support Nigerians but would instead subject them to pay bank fees just to support the luxury lifestyles of bank executives,” Murray-Bruce added.

In light of all that, he advised the Central Bank of Nigeria to rethink its cash withdrawal limit policy and first of all, put its house in order.

No going back

Meanwhile, following his invitation by the Nigerian National Assembly to defend the new policy, the Governor of CBN, Godwin Emefiele, has said that it has come to stay.

According to Emefiele, the limitation was not intended to hurt anyone.

“And we think Nigeria, as the biggest economy in Africa, needs to leapfrog into the cashless economy.

“We cannot continue to allow a situation where over 85 per cent of the cash that is in circulation is outside the bank. More and more countries that are embracing digitisation have gone cashless,” he said.

He added that there would be no rigidity on the policy and no reversal, appealing to Nigerians to embrace the

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