Kuda, the free bank and the first mobile-only bank licensed by the Central Bank of Nigeria (CBN), has effected the deduction of the N50 stamp duty contained in the 2020 finance act.
This was announced through mail sent to the customers using the fintech platform. However, this has been met with different reactions from the bank users.
Some believe the bank is pulling out of its initial promise of the ‘bank for the free’ as it was just a strategy used by the fintech brand to get customers to its platform.
According to the mail from Kuda, “In line with the federal government’s duty act, we‘re required by law to apply N50 charge to all deposits of N10,000 or more made into your Kuda account.
This charge will apply to an electronic transfer, money added to your account with a debit card, and cash deposits made into your account at any of our partner banks”.
Kuda’s stand on the stamp duty
Despite people’s reaction, the bank, the seventh most valuable in Nigeria, stated that it gains nothing from the new development. In defence of the integrity of the bank, it says, “We don’t gain anything from the charge.
The federal government has directed all financial institutions to apply the charge, and we hand over the entire charge to the government”.
The stamp duty is applied to transactions, but the operational process remains the same. The bank said, “We will continue to do our best to give you free financial services that you can rely on, including covering the cost of your first 25 transfers to other banks every month”.
Kuda: the bank for the free
Since its launch in 2016, Kuda has grown to be one of the most cost-effective banks in Nigeria. The bank now has over two million registered users on its platform. This was thanks to its business model that offers flexible banking services.
Bradley Want, Head of Growth and Analytics at Kuda, said, “Nigerians seem to be more open to skipping the queues and the hassles that come with being at a physical bank.
Everyone knows that it can be quite uncomfortable. We’re taking advantage of this positive change in perception by being where people are all the time and offering them the value they can’t ignore”.
This immense growth made it possible for the six years old fintech company to receive $25 million in a Series A round and $55 million in a Series B round. This leaves the bank with a $500 million market value.
2020 Finance Act
In 2020, the President of the federal republic of Nigeria, Muhammadu Buhari, signed the Finance Act, previously known as Finance Bill, into law.
This was done together with the 2021 Appropriation Act (previously known as the Appropriation Bill). It features over 80 amendments to fourteen laws and became effective on January 1, 2021.
The amendments are also reflected in the country’s tax and regulatory legislation. This includes the Capital Gains Tax Act, Companies Income Tax Act, Personal Income Tax Act, Value Added Tax Act, Nigeria Export Processing Zone Act, Oil and Gas Export Free Zone Act, Federal Inland Revenue Service (Establishment) Act, and Customs and Excise Duties Act, among others.
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