The national assembly has increased the windfall tax on banks’ foreign exchange (FX) gains to 70 percent — from the proposed 50 percent — in the amended Finance Act of 2024.
A windfall tax is a higher tax imposed by the government on sectors or businesses that have benefitted from favourable market conditions.
On July 6, 2023, President Bola Tinubu signed the Finance Act (Effective Date Variation) Order, 2023 – which took effect September 1, 2023.
Tinubu, on July 17, asked the national assembly to amend the finance act to impose the windfall tax on banks.
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Both chambers of the national assembly passed the amended bill on July 23.
According to the amended Act, passed by the green chamber, “a levy of 70 percent on the realised profits from all FX transactions of banks within the 2023 to 2025 financial years would be levied and paid to the benefit of the federal government”.
“The Federal Inland Revenue Service shall assess the realised profits, collect, account and enforce payment of tax payable under section 30 in accordance with the powers of the Service under the Federal Inland Revenue Service (Establishment) Act 2007,” the document reads.
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The document said the FIRS, in the exercise of its functions, may enter into a deferred payment agreement with the assessed banks, provided that such deferred payment agreement is executed on or before December 31, 2024.
The finance Act said any bank that fails to pay the windfall tax to the service and has not executed a deferred payment agreement before December 31, “commits an offence”.
Such banks, upon conviction, “shall be liable to pay the tax withheld or not remitted in addition to a penalty of 10 percent of the tax withheld or not remitted per annum and interest at the prevailing Central Bank of Nigeria (CBN) minimum rediscount rate and its principal officers are liable to be imprisoned for not more than three months”.
The lawmakers said the 70 percent windfall tax would take effect from January 1, 2023.
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