Senate passes bill seeking to tax banks’ FX gains

The senate has passed a bill seeking to impose a one-time windfall tax on banks for foreign exchange (forex) gains.

The bill was passed by the upper legislative chamber on Tuesday after Sani Musa, chair of the finance committee, presented a report.

While presenting his report, Musa said windfall tax is not meant to be paid by banks to their shareholders as dividends.

The Niger east senator said any bank that withholds its tax would be liable to pay 10 percent in addition to what they ought to have paid.

“The windfall tax is not to be paid by banks to their shareholders,” he said.

In a letter to the national assembly last week, President Bola Tinubu asked the lawmakers to amend the Finance Act 2023 to allow the federal government tax banks’ foreign exchange gains.

“Furthermore, the proposed amendments to the finance acts 2023 are required to a one-time windfall tax on the foreign exchange gains realized by banks in their 2023 financial statements,” Tinubu said.

The president said the windfall tax will be used to fund capital infrastructure development, education, and healthcare as well as welfare initiatives.

After the bill is signed into law, the senate said authorities would collect the foreign exchange gains tax from the banks from the period the monetary policy reforms of the Tinubu administration took effect.