Finance Act: 50% Banks Forex Gains Tax Won’t Affect Nigerians, FG, NASS Pledge

•As National Assembly joint panel summons Cardoso

Sunday Aborisade in Abuja

The federal government and National Assembly clarified, Monday, that the proposed Finance (Amendment) Bill, 2024 was not intended to impose a levy that would affect Nigerians, stressing that the tax is squarely targeted at banks’ forex gains.

According to the executive and national legislature, the bill seeks to amend the Finance Act, 2023 to provide for the imposition of windfall tax, assessment and review of profits declarations and for deferred payment agreements for financial institutions by the Federal Inland Revenue Service.

The two arms of the federal government insisted that the move was a pivotal step in the country’s economic transformation journey.

The explanations were made by Chairman, Senate Committee on Finance, Senator Sani Musa (APC, Niger East); his House of Representatives counterpart, Honourable James Faleke; Minister of Finance and Coordinating Minister of the Economy, Wale Edun; and Chairman, Federal Inland Revenue Service (FIRS), Zack Adedeji.

They said the bill sought to impose a 50 per cent levy on the realised profits from all foreign exchange transactions of banks within the 2023 financial year to December 2024.

The disclosures were made at an interactive session with relevant stakeholders on the Finance Act (Amendment) Bill, 2024.

The Senate and House of Representatives summoned Governor of Central of Nigeria (CBN), Yemi Cardoso, his team, and bankers’ committee to appear before them today (Tuesday) at 11am to make their inputs on the proposed bill.

Edun explained that the monies to be taken from the banks should not be considered as tax but levies. He dismissed the view that the levies would be passed on, implicitly, to banks’ customers.

Edun said, “This is an important opportunity given to all stakeholders. All over the world it is common that the society takes a share of such profit

“This is an important contribution to the finances of the government at this time; however, it is important to say that has been robust without raising taxes, there is a minimisation of taxes,

“Government revenue has increased substantially. Broadly speaking, it is a levy on 2024 realised gains on foreign exchange within the banking sector. It is a pity that the banking system is not here and even the central bank is not here to participate in this discussion.

On his part, the FIRS boss, Adedeji, disclosed that surcharging the banks for the sole aim of redistributing wealth had become most imperative to balance the shortage recorded by other sectors owing to the policies.

According to him, the manufacturing sector has made N1.7 trillion loss as a result of the forex and based on that the agency could not tax them.

Adedeji said, “It’s not that we are going after the profit, but recovering the losses incurred by the activities as a result of their own ineptitude, bringing a policy to correct the policy decision.

“Everybody realised that it is not their money, money earned in the normal course of your business.”

The chairman of the joint committee, Musa, stated that the amendment of the Finance Act, 2024 was to impose and charge windfall tax on banks and provide for the administration of the tax.

He said, “The proposed Finance (Amendment) Bill, 2024, is a pivotal step in our nation’s economic transformation journey.

“This bill seeks to impose a 50 per cent levy on the realised profits from all foreign exchange transactions of banks within the 2023 financial year to December 2024.

“The intent behind this levy is to ensure that banks contribute their fair share to national revenue, especially in light of the substantial gains made from foreign exchange activities.

“The levy does not affect Nigerians, it is not on Nigerians, but the huge profits on forex that the banks made.

“His Excellency, President Bola Ahmed Tinubu’s administration has initiated numerous economic reforms aimed at propelling Nigeria towards a future of advancement and prosperity.

“This bill is one of the bold decisions undertaken to provide the government with the necessary funding to address our country’s multifaceted infrastructure deficit. The success of these reforms hinges on our collective support and active participation. “