Senate increases windfall tax on banks to 70%
The Nigerian Senate has passed a Bill seeking to amend the Finance Act, of 2023 to impose and charge a windfall levy on banks’ foreign exchange gains, but with an amendment from 50% to 70% as the levy charge.
The Bill was read for a third time after the Upper chamber considered the report of the Committee on Finance during plenary on Tuesday.
The additional N6.2 trillion contained in the Appropriation Amendment Bill will be financed by the one-time windfall tax on banks’ foreign exchange profits as approved by the National Assembly, and other independent sources of revenue.
The Senate approved further amendments to the Finance Amendment Bill presented by President Tinubu.
The Bill initially proposed a 50% sharing formula on the realized profits on the exchange transactions of the banks, but the Senate amended it to reflect an upward review to 70%, stressing that the windfall was not a result of any effort of the banks or value addition, but as a result of government policy which must be redistributed.
The Senate also amended the Bill approving the payment of the levy to take effect from the new foreign exchange regime to 2025, and not from January 2024. Lawmakers noted that the initial proposal would mean creating a retrospective law.
The Upper Chamber also removed the proposed jail term of up to three years for Principal officers of defaulting banks. The Bill now prescribes that any bank that fails to pay the windfall levy to the federal Inland RRevenueService and has not executed the deferred payment agreement shall be liable to pay a windfall levy not remitted in addition to a fine of 10% of the levy withheld or not remitted er annum and interest at the prevailing Central Bank of Nigeria (CBN) Minimum Rediscount Rate (MMR).
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