Windfall tax on banks’ FX gains recovery plan for Nigeria’s economy – FIRS Chairman,Adedeji

The federal government says the proposed 50 percent windfall tax on banks’ foreign exchange gain in 2023 would be a recovery plan to balance the country’s economy.

The Chairman of the Federal Inland Revenue Service, Zacch Adedeji disclosed this on Monday at the Senate Committee on Finance, in the company of the Minister of Finance, Wale Edun.

He noted that while the banking sector declared FX gains, the manufacturing sector lost N1.7 trillion when the Naira was floated in 2023 at the FX market.

“What we are not taking into consideration in this conversation is the fact that we are focusing only on the banks. What we are balancing is that in the last year, all manufacturers in Nigeria declared N1.7 trillion in losses as a result of forex.

“That concerns the government because, by our law, we will not be able to collect any tax from them until they recover all those losses. Maybe until the next five to ten years.

“It is not that we are going after the profit but that we are recovering the losses that we had from the other side of the economy.

“I want us to look at it in that perspective, not that we are focusing only on the banks. The manufacturers who by law should pay us taxes suffered because of activities that are not because of their ineptitude but because of policies.

“If you follow in February, the Central Bank of Nigeria issued a circular and even when they declared profit, CBN issued a specific circular to them stating that all the money from this must not be spent either for dividends or for expenses.

“That is because everybody realized that this is not their money. The same thing in capitalization that you talked about, it is explicitly stated that you must not use this as part of the capital that you want to show,” he said.

This online medium reports that as part of the N6.2 trillion 2024 supplementary budget submitted last week, President Bola Ahmed Tinubu also asked the lawmakers to amend the 2023 Finance Act to give room for the windfall tax on bank’s FX earnings.

Accordingly, the government is expected to receive 50 percent revenue on a collective FX N3.7 trillion gains from banks in 2023.