Nigerian banks and the Federal Inland Revenue Service, FIRS, have been ensnared in disagreement over the one-off foreign exchange windfall tax, weeks after an initial deadline elapsed.
Recall that President Bola Ahmed Tinubu in July 2024 sought lawmakers’ approval for a 50% tax on banks’ realized–foreign-exchange gains, following the naira devaluation on June 14, 2023.
Thereafter, the National Assembly passed the bill seeking the one-off tax, called the Wildfall Tax, with the Senate raising the rate to 70%.
Nigerian banks benefit from Tinubu’s foreign exchange reform in 2023, which led to an initial 40% devaluation of the currency, resulting to the dawn of windfall tax.
Nigerian top-tier banks were to be debited by the Central Bank of Nigeria, CBN, on December 31, 2024, for the windfall tax; but Nigerian banks are yet to give in on the windfall tax implementation.
“The banks are arguing with the FIRS on the calculated sums of tax due and are reverting with their own calculations based on the same principles the FIRS is basing its numbers on.”
Four of Nigeria’s five largest banks recorded huge foreign exchange revaluation gains in 2023, with First Bank of Nigeria Holdings the only exception.
To this end, reports have it that Access Bank, Zenith Bank, Guarantee Trust Bank, and United Bank for Africa saw their combined gross earnings more than double to N8 trillion in 2023.
Similarly, profit before tax for the four banks jumped more than two-fold to N2.9 trillion, according to the results declared for the year.
Gains made from currency revaluation account for as much as a third or more of their entire profit for the year under consideration, according to the credit-rating agency Moody’s, which covers the top nine Nigerian lenders.
The Chairman of the Federal Inland Revenue Service, Zacch Adedeji, in July said the windfall tax is a recovery plan to balance the Nigerian economy. This comes amid the opposition by stakeholders in the banking sector.
However, Femi Otedola, the Chairman of FBNH, whose bank was not affected, backed the federal government on the implementation of the windfall tax.
