“More Trouble for Naira”: Expert Reacts As FG Plans To Tax Forex Transactions on Black Market
- The federal government may consider taxing Nigerians who use the black market to exchange their forex earnings
- This was one of the recommendations put forward by Tinubu's Fiscal Policy and Tax Reform Committee
- The committee, headed by Taiwo Oyedele, said the new tax will discourage Nigerians from using the black market
- Dave Ibemere is a senior editor with over 10 years of experience covering business and economy
The value of the naira could slide even further in the black market against the US dollar, as the federal government plans to impose excise tax penalties on foreign exchange transactions conducted outside the official market window soon.
This new tax is part of the recommendations presented by the Presidential Fiscal Policy and Tax Reform Committee, led by Taiwo Oyedele, to the federal government to boost revenue.
Read also
Full list: Tax committee submits 20 recommendations to Tinubu for quick action, he responds
Source: Facebook
The committee expects the excise duty not only will help generate revenue for the government but also discourage patronage of the black market, BusinessDay reports.
Details of new forex recommendations
Providing details via his X (formerly Twitter) account, he explained that the recommendation is meant to promote transparency, encourage ease in business transactions, and enforce the single exchange rate system in the sector.
PAY ATTENTION: Share your outstanding story with our editors! Please reach us through info@corp.legit.ng!
The forex recommendations he said are:
“Imposition of excise tax on foreign exchange transactions outside the official market”is part of what was proposed to the federal government.
“Permit the payment of taxes on foreign currency-denominated transactions in Naira for Nigerian businesses.
Digitalise Nigeria’s fx regime and discourage speculative demands and hoarding of fx in cash.
“Discontinue the fx verification portal and requirement for Certificate of Capital Importation and export proceeds restriction.”
Naira exchange rate
While the recommendation may seem perfect as the Central Bank of Nigeria pushes for a single exchange rate, it might end up causing the naira to weaken further from its current level of N1,301/$ at the black market.
A Kunle Ajayi, a financial analyst in Lagos, explains:
"The major challenge for naira is forex liquidity and If the federal government goes ahead to implement the suggestion without having enough dollar in the official window, Nigerians will continue to patronise black market traders and will be very ready to pass on the excise duty cost, causing the naira to fall even further.
"The major challenge is forex liquidity and for the federal government to achieve its aim with the new tax, it must fix the issue of dollar supply, or it will be more trouble for naira."
Also reacting, former statistician director of Nigeria, Dr Yemi Kale, took to x to raise concerns on the CBN decision.
His words:
"Won’t this lead to more fx being held in cash and outside the banking system ? And for those that still choose to continue to use the financial system , won’t it further widen the forex gap since they now have to add those taxes into the exchange price to compensate for them?"
FG moves to crash the dollar with $10bn inflow
Meanwhile, the Nigerian government earlier said the country will soon see a 10 billion dollar inflow into the economy
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the inflow will ease the pressure on the naira.
Source: Legit.ng
