The Nigerian government has sought to amend the Finance Act to impose a one-off 50% windfall tax on Nigerian banks’ realised foreign exchange gains. The move is to fund the additional N6.2 trillion budget increase President Tinubu requested from the National Assembly.
Financial analyst David Olujimi says the new development is certain to trigger accounting and legal fireworks. The banks may have a case for being multiple-taxed as they already pay company income and capital gains taxes, amongst other things.
Speaking on Newscentral’s business programme, Market Pulse, on Thursday, Olujimi revealed that data tracked last year showed that banks made over N3 trillion for the 2023 financial year but acknowledged that a thorough analysis is needed to arrive at a more accurate estimate of how much banks make.
The windfall tax is a wealth redistribution scheme practiced globally. It targets companies that profit from a sudden movement in prices, usually due to an event or incident.
In Nigeria, while prominent manufacturers and other service providers made tremendous losses last year, many banks declared massive profits due to the volatility in the foreign exchange market.
The government aims to tax half of these profits to compensate for the revenue shortfall and fund the increase in the 2024 Appropriation Bill.
