Checkout Magazine has learnt that the proposed one-off tax on 2023 foreign exchange (forex) gain by banks may fetch the Federal Government not less than N2trillion.
President Bola Ahmed Tinubu hinted at his administration’s plan to tax the banks’ gain in the proposed amendment to the 2023 Finance Act before the National Assembly.
Also before the National Assembly is an Executive Bill on the 2024 Supplementary Budget seeking to raise N6.2 trillion to fund infrastructure.
The tax on banks’ forex windfall in 2023 is meant to raise part of the funding for the supplementary budget.
The levy on forex revaluation gains, otherwise known as a windfall, will be used to finance “Renewed Hope” infrastructure projects, education and healthcare, among others.
A review of audited reports and accounts of banks and independent analysts’ reports yesterday estimated forex revaluation gains at about N4 trillion in 2023, half of which the government is seeking to appropriate for national budget funding.
For instance, three of Nigeria’s five biggest banks – Guaranty Trust Holdings Company (GTCO), Zenith Bank and United Bank for Africa (UBA), made forex revaluation gains of about N700 billion last year 2023, with GTCO accounting for about two-thirds of the total gains by the big three.
GTCO recorded a forex revaluation gain of about N442 billion in 2023, followed by Zenith Bank and UBA with N229 billion and N27 billion respectively.
If passed into law, the government will receive about N350 billion in one-off payments from the three banks.
The 2023 Finance Act amendment stipulates that “there shall be levied and paid to the benefit of the Federal Government of Nigeria a tax of 50 per cent 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.”
