The federal government has evolved a plan to tax banks 50% of profit realised from foreign exchange revaluation in 2023.
Recall that Bola Tinubu administration had in June 2023 unified the exchange rate market, which caused the rate to move from N460 to about N1,500 at the official market.
The disparity resultex in banks making gains from foreign exchange, but the CBN barred them from paying out Forex gains as dividends.
The government has subsequently evolved plan to tax the foreign exchange gain to fund 2024 budget.
The plan is contained in the proposed amendments to the 2023 Finance Act sent by the President to the National Assembly for approval.
Revenues from the proposed windfall tax as stated in the letter from the President to the Senate are to be deployed to "Renewed Hope" infrastructure projects, education, healthcare etc.
The tax on foreign exchange gains described as "windfall tax" according to the document, shall be collected by the Federal Inland Revenue Service (FIRS).
"There shall be levied and paid to the benefit of the Federal Government of Nigeria a tax of 50% on the realised profits from all foreign exchange transactions of banks within the 2023 financial year
"The Federal Inland Revenue Service - (a) shall assess the realised profits, collect, account and enforce payment of tax payable under section 30 in accordance with the powers of the Service under the Federal Inland Revenue Service (Establishment) Act 2007;"
The amendment further that the failure of banks to remit the recommended sum to the appropriate authority will upon conviction pay the tax withheld and 10% of the withheld tax coupled with interest at the Central Bank of Nigeria (CBN) minimum discount rate or risk imprisonment of key principal officials
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