There is growing opposition to the proposed 70% foreign exchange windfall tax on commercial banks, with stakeholders urging the federal government to reconsider the measure.
Stakeholders have called on President Bola Ahmed Tinubu not to sign the amended Financial Bill, which was passed by both the Senate and the House of Representatives. The Senate approved the bill last week, and the House followed suit on Tuesday. The bill aims to impose a one-time windfall tax on banks’ foreign exchange profits in 2023 and includes provisions for the imprisonment of principal officers who fail to comply, along with a 10% penalty on withheld or unremitted levies and interest at the prevailing Central Bank of Nigeria (CBN) minimum rediscount rate. If signed into law, the bill would take retroactive effect from January 1, 2023.
Bankers, financial experts, and other critical stakeholders in the Nigerian financial sector have warned that the levy could be counterproductive, particularly given the ongoing economic reforms and banking recapitalization efforts.
The Chartered Institute of Bankers of Nigeria (CIBN) stated that the levy could lead to reduced investment, decreased liquidity, and increased costs, negatively impacting Nigeria’s economic growth. CIBN President, Professor Pius Olanrewaju, noted that the forex windfall tax might worsen currency volatility due to reduced market participation and could amount to double taxation since banks already pay a 30% income tax.
“Will this not amount to double taxation? Or should the tax already paid be deducted from this new imposition? This proposed tax will violate fairness and equity in taxation as banks are the only entity singled out for this payment. This is discriminatory,” said Olanrewaju. He also pointed out that other sectors or businesses that recognized similar foreign exchange gains in 2023 are not subjected to this tax. In countries where such windfall taxes are imposed, there are usually corresponding incentives to cushion the effect, but none have been proposed here.
Rasheed Bolarinwa, President of the Association of Corporate & Marketing Communication Professionals of Banks (ACAMB), emphasized that banks should not be burdened with a new levy amid ongoing recapitalization efforts. He highlighted the need for more monetary and fiscal incentives to support the federal government’s $1 trillion economic agenda.
“We shouldn’t kill the goose that lays the golden eggs. Government should have a rethink. We think further consultation is needed in this case. We know the President has a listening ear, as demonstrated on many occasions, and we expect banks should be given a fair hearing on this,” said Bolarinwa.
Former CIBN President Olatunde Amolegbe also expressed concerns, stating that the forex windfall levy could negatively affect the banking recapitalization process and send the wrong signals to investors. He warned that this could impinge on banks’ ability to raise the necessary capital to support the government’s economic goals.
News Editor 
Hyelsinta Hassan