The Senate has amended the 2023 Finance Act after passing the Finance Act 2023 Amendment Bill sent to the upper chamber by the President.
As part of the amendments, the Senate has now imposed a one-time windfall tax on banks for foreign exchange (forex) gains.
The Senate passed the bill on Tuesday after the Chairman of the Senate Committee on Finance, Sani Musa (Niger East) presented the committee’s report. Senator Musa said that the windfall tax is not meant to be paid by banks to their shareholders as dividends.
He said that the bill provides that any bank that withholds its tax would be liable to pay 10 percent in addition to what they ought to have paid.
The 50 percent tax on banks’ forex gains according to a clause inserted in the amended Finance Act would take effect on banks’ 2023 financial statement once the bill is signed into law.
The senate said the relevant authorities would collect the foreign exchange gains tax from the banks from the period the monetary policy reforms of the Tinubu administration took effect.
Last week, President Bola Tinubu sent a letter to the national assembly asking the lawmakers to amend the Finance Act 2023 to allow the federal government tax banks’ foreign exchange gains.
The president said the windfall tax will be used to fund capital infrastructure development, education, and healthcare as well as welfare initiatives. The federal government is targeting N425 billion from this one-time windfall tax.
A windfall tax is a higher tax levied by the government on sectors or businesses that have disproportionately benefited from favourable market conditions.
Following the monetary policy reforms of the Tinubu administration that has seen devaluation in the Naira, many banks posted astronomical forex revaluation gains. This is what the federal government is seeking to impose a one-time tax of 50%.