NASS Passes Finance Bill, Imposes 70% Levy On Banks’ Windfall Forex Profits
On Tuesday, the National Assembly approved an amendment to the Finance Act, introducing a 70% levy on banks’ windfall forex profits for 2023.
The passage followed the consideration of the Joint National Assembly Committees on Finance’s report by both chambers. Senator Sani Musa and Hon. James Faleke presented the report in the Senate and House of Representatives, respectively.
The Joint Committee observed that banks benefited significantly from the Federal Government’s exchange rate unification policy through FX allocations to selected commercial banks. This windfall is restricted from being used for dividend payments.
Key recommendations from the committee included:
– The application of Section 30 of the Principal Act starting January 1, 2023.
– A 70% levy on realized profits from all bank exchange transactions, with 70% going to the federal government and 30% to the banks.
– Penalties for banks failing to pay the windfall profit levy, including a 10% fine per annum and interest at the prevailing Central Bank of Nigeria minimum discount rate.
Finance Minister and Coordinating Minister of the Economy, Wale Edun, revealed that the Federal Government injected N1 trillion into the manufacturing sector over the past year as incentives. Edun spoke during a meeting with the National Assembly Joint Committee on Finance about the proposed tax on banks’ forex windfall.
At the meeting, Federal Inland Revenue Service (FIRS) Chairman, Mr. Zacch Adedeji, highlighted the Accelerated Stabilization Fund’s focus on legacy projects aimed at enhancing infrastructure for the sector’s viability. Edun assured the committee that the manufacturing sector was already being supported.
Edun stated, “There is expenditure of one trillion naira (N1trn) in terms of incentives to the manufacturing sector to help them with the high cost of production. Additionally, there is low-interest funding coming for the manufacturing sector under the Accelerated Stabilization and Advancement Plan.”
Adedeji emphasized that the proposed windfall tax aims at wealth redistribution, benefiting various sectors. He detailed President Bola Tinubu’s strategic projects, such as the Badagry-Sokoto Highway and the Lagos-Calabar Coastal Highway, designed to boost the manufacturing sector.
However, the sharing percentage of the one-time windfall tax between the Federal Government and banks was not finalized. President Tinubu initially proposed a 50% split, which some committee members suggested increasing. The National Assembly ultimately raised the levy to 70% in favor of the Federal Government.
