What is C.O.T?


CBN-building C.O.T is a commonly used abbreviation for Commission on Turnover. It is a charge levied on customer withdrawals by their banks. C.O.T charges are typically calculated at “5 per mille” (5 for every 1000). Thus for every N1000 withdrawn your C.O.T will be N5, which is an equivalent of 0.5% (5/1000). It is always calculated at the end of every month applying the percentage on your aggregate withdrawals from the 1st day of the month to the last day of the month.

The C.O.T is a guaranteed income and as such is a very important source of bank revenue since customers mostly make withdrawals on their deposit. This gives the banks a two way source of revenue as they charge interest on customer deposits lent to other people and consequently charge on amount withdrawn by the customers themselevs. It is also an approved source of revenue for banks according to CBN guidelines.

Banks can be flexible with C.O.T charges depending on the turnover of your account. If your account regularly sees withdrawals of say N100m monthly there is every likelihood the bank can reduce its C.O.T charges to as low as 0.1% or in some cases zero.

In addition to C.O.T charges, banks usually charge Value Added Tax on the amount deducted. For example for an account with a monthly turnover of N10m the C.O.T at 0.5% will be N50,000. The bank will charge additional VAT of 5% on the N50,0000 bringing the total amount paid to N55,000.

The post above and its ensuing comments, if any, is purely the opinion of the writer(s). It therefore should never be considered as an investment advise of any sort. If required, readers should please consult a competent professional financial adviser for any investment decision.


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