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WINDFALL TAX
Nigeria's proposed windfall tax on foreign-currency revaluation gains of Nigerian banks could generate up to 0.3% of the country's Gross Domestic Product (GDP) in 2024, offering a temporary fiscal boost amid ongoing economic challenges.
The Nigerian senate yesterday passed the amendment bill of the 2023 finance act and increased the windfall levy on banks foreign exchange revaluation gains from 50% as proposed by the President to 70%.
Tax and Advisory Service firm, PricewaterhouseCoopers (PwC) has stated that the federal government’s latest legislation to tax already reported profits of banks in 2023 could deter future investments into the country.
In 2023, eleven Nigerian banks incurred a total of N575.168 billion in taxes, marking a significant 175% increase compared to the N209.608 billion incurred in 2022.
The New Dimension Shareholders Association of Nigeria has strongly criticized the Federal Government's decision to impose a 50% windfall tax on banks due to their foreign exchange gains.
Global tax and advisory service firm, KPMG Nigeria has criticised the 50% windfall tax on the bank’s foreign exchange revaluation gains recorded in 2023 stating that it could result in a legal dispute.
Early trading data in the Nigerian Exchange has shown a pattern of decline across bank stocks, as investors react to the proposed 50% tax on FX gains.