Group lauds one-off windfall tax policy on foreign exchange

The one – off windfall tax policy on profits made by banks on foreign exchange revaluation by the President Bola Tinubu administration has been described as a product of ingenuity and creativity.

The Tinubu Media Support Group (TMSG) who made this assertion said that only a creative mind like President Bola Tinubu could come up with this innovation of one-off windfall tax on profits made by banks from foreign exchange revaluation of 2023.

In a statement signed by its Chairman Emeka Nwankpa and Secretary Dapo Okubanjo, the group added that the government’s decision to deploy proceeds from the tax to infrastructure development is a good way of getting the banks to give back to the society and participate more concretely in national development.

Going down the memory lane, the TMSG recounted that when the Central Bank of Nigeria (CBN) unified the multiple foreign exchange rates last year, it was clear to every discerning Nigerian that commercial banks in the country would make a tidy profit from the policy.

It said: “So it was not a surprise that many of the banks which barely made N5bn in foreign exchange gains in 2022 were posting profits as high as N26bn in their financial statements in the subsequent year.

“For example, one of Nigeria’s biggest commercial banks holding company posted a revaluation gain of N441.79bn last year, far outsripping a meagre N57.94bn it recorded in 2022.
“We also have it on good authority that nine of Nigeria’s top banks made over N2tn in the first nine months of 2023 after the CBN floated the naira but the good thing is that they were open enough to declare it as gains from the revaluation of foreign currency- denominated assets and liabilities held in their non-trading books.

“It is a good thing, however, that the President Bola Tinubu administration has deemed it fit to impose a one-time windfall tax on the banks’ forex gains.

“Which, according to provisions of the amendment sought to the Financial Act, would be ploughed into capital infrastructure development, education and health care projects lined up in the Renewed Hope Agenda.

“There is a strong possibility that the Federal Inland Revenue Service (FIRS) will collect in excess of N1tn from the windfall tax and we are convinced that the Tinubu administration will ensure judicious use of the revenue in line with provisions of the proposed amendment to the act.
“We know that some tax and advisory service firms have been expressing concerns about what they consider as drawbacks, but we are opting to look at the positives.

“We see it as a better option to funding the additional N6tn made to the 2024 budget rather than employing measures that will increase the tax burden of the average Nigerian.

“It is a creative endeavor that will still see the banks holding on to a large chunk of the massive gains they made at the expense of Nigerians in one year. So it is a win-win situation which will see the banks give back to the society.”

The pro-Tinubu group urged stake holders in the banking industry to see the proposed tax as their contribution to national development.