Nigerian banks and the federal government, through the Federal Inland Revenue Service, have been enmeshed in disagreement over how much should be paid in a one-off foreign exchange windfall tax, two weeks after an initial deadline elapsed.
Recall that President Bola Ahmed Tinubu in July 2024 sought lawmakers’ approval for a 50 percent tax on banks’ realised foreign exchange gains following the naira devaluation on June 14, 2023.
Thereafter, both chambers of the National Assembly passed the bill seeking the one-off tax, called the wildfall tax, with the Senate raising the rate to 70 percent.
Nigerian top-tier banks were to be debited by the CBN on December 31, 2024, for the windfall tax.
However, Business Day on Monday reports that barely two days after the deadline, Nigerian banks are yet to give in on the windfall tax implementation.
The banks and the FIRS, however, can’t seem to agree on the tax due, two weeks after the payment deadline.
“The banks are having a quiet tango with the FIRS on the windfall tax issue at the moment,” a source familiar with the matter told Business Day.
“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.
“All banks were going to be debited on December 31 by the CBN based on FIRS numbers, but the coordinating minister of the economy said no.
“Most of the banks now live in fear of being hammered anytime from now by the CBN based on whatever FIRS wants to do,” the source further said.
The windfall tax comes as the Nigerian banks benefit from Tinubu’s foreign exchange reform in 2023, which led to an initial 40 percent devaluation of the currency.
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.
The tax will see the federal government rank in 70 percent of the N3.7 trillion FX gain by banks in 2023.
