The Nigerian Senate has significantly increased the windfall levy on banks’ foreign exchange revaluation gains from the initially proposed 50% to a hefty 70%. This decision follows the passage of an amendment to the 2023 Finance Act.
Senator Sani Musa, Chairman of the Senate Committee on Finance, presented the committee’s report to the chamber before the final vote. The Senator outlined the stringent implications of non-compliance: “The levy shall be 70% of the realized profits of all exchange transactions from banks. Any bank that fails to pay the windfall profit levy by December 31, 2024, without a deferred payment agreement, will face a 10% fine on the unpaid levy per annum, plus interest at the CBN’s minimum discount rate.”
In response to concerns about the retroactive nature of the amendment, the Senate adjusted the commencement date to align with the implementation of the new foreign exchange policy. Additionally, the scope of the levy was expanded to cover all foreign exchange transaction profits from the start of the new policy until the 2025 financial year.
President of the Senate, following a clause-by-clause deliberation, officially passed the amended bill. He declared, “Distinguished colleagues, a bill to amend the Finance Act 2023 to impose and charge a windfall levy on banks and to provide for the administration of the levy and related matters, 2024, has been read a third time and passed.”
The Senate also approved an additional N6.2 trillion to the 2024 budget for recurrent expenditure, including the implementation of the N70,000 minimum wage and infrastructure projects.
This development follows President Bola Tinubu’s request to amend the 2023 Finance Act to impose a one-time windfall tax on banks’ foreign exchange revaluation profits for the 2023 financial year. The amendment includes severe penalties for non-compliance, potentially including imprisonment for key officials.
The proposed windfall tax has sparked controversy, with experts raising concerns about its legality, timing, and potential impact on the economy. KPMG Nigeria criticized the retroactive nature of the levy, while PwC Nigeria expressed worries about its impact on investment. Prominent lawyer Dr. Olisa Agbakoba described the proposal as ill-conceived and warned that the burden would ultimately be transferred to bank customers.
