House of Reps Approves FG's Plans To Remove N2trn from Access, UBA, Zenith, Other Banks’ Accounts
- The House of Representatives has passed a bill to impose a Windfall Tax on commercial banks that benefited from CBN subsidies
- The government is looking to increase its non-oil revenue and has its eye set on commercial banks' foreign exchange (forex) gains
- There are concerns that the new tax targeted at commercial banks will be transferred to bank customers
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The House of Representatives has passed a bill to impose a Windfall Tax on commercial banks profiting from the Central Bank of Nigeria's (CBN) foreign exchange subsidies.
The move is part of a broader effort to amend the Finance Act 2023 to raise revenue and checkmate forex volatility.
Source: Getty Images
Reps pass bill on windfall tax
Speaking on a bill titled "An Act to Amend the Finance Act, 2023 to Impose and Charge Windfall Tax on Banks and Provide for the Administration of the Tax and Related Matters (HB. 1611)," James Faleke, while reading the synopsis of the bill, noted that the CBN sold forex below the official exchange rate.
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He added that these forex were designed to help provide naira stability.
Faleke stressed that despite these measures, volatility persisted, allowing many commercial banks to reap a lot of profits.
Daily Trust reports that the apex bank sold dollars at about N1,020/$ to arrest the naira's free fall.
Some of the banks that reported forex gains in 2023
- GTCO: N441.79 billion
- Zenith Bank: N228.98 billion
- UBA: N26.58 billion
- FCMB Group: N83.96 billion
- Fidelity Bank: N44.09 billion
- Access Holdings: N17.25 billion
- FBN Holdings: N8.77 billion
Punch reports that the tax, which will be 50% of the banks' forex earnings in 2023, will be debited to fund part of the 2024 supplementary budget.
The tax could fetch at least N2 trillion in extra revenue for the Nigerian government.
Expert reacts to the bill
The bill has faced criticism from financial experts who believe that the banks might push the burden to customers.
Wale Ajayi, PMG Partner and Head, Tax, Regulatory and People, in a note available to Legit.ng expressed surprise at the federal government's decision.
He said:
“The impact of this retroactive application may raise constitutional concerns as it may violate the principle of legitimate expectations.
"It will, therefore, not be surprising if the implementation leads to legal disputes and challenges.
"Retroactive tax laws can discourage investment as potential investors may perceive the Nigerian tax system as unpredictable."
Fraudsters swindle N18 billion from banks, PoS operators
Legit.ng reported that the Nigeria Inter-Bank Settlement System revealed that financial institutions suffered approximately N17.67 billion in losses due to fraud in 2023.
This was revealed in the NIBSS' Annual Fraud Landscape report (January to December 2023) published on its website.
Established in 1993, NIBSS facilitates same-day clearing and settlement of inter-bank transfers and payments.
Proofreading by James, Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
