The Bank Directors Association of Nigeria has declared the proposed 70 per cent windfall tax on profits generated from foreign exchange transactions by banks excessive and ill-timed.
Chairman of the Board of Directors of the association, Mustafa Chike-Obi, in a statement after the board’s meeting, said while they respect the intentions of the government in making the decision, there were concerns about the magnitude of the levy, its timing and the ambiguities surrounding its implementation.
He pointed out that the tax is burdensome and ill-timed, particularly considering the ongoing bank recapitalisation efforts.
According to Chike-Obi, such a high levy has the potential to stifle growth and innovation within the banking sector, ultimately affecting the quality of services we provide to our customers and the broader economy.
He also decried that the stakeholders in the banking sector were not consulted prior to the enactment of such significant changes in the Finance Act 2023, noting that open dialogue and negotiation are essential to ensure that policies are both equitable and effective.
The association said that its primary concern lies in the ambiguities of the language in this amendment which leaves critical questions unanswered.
The questions, it noted, include “whether the windfall tax will be implemented as a Total Tax charge on banks, incorporating other taxes already levied such as Company Income tax, Tertiary Education Tax, National Information Development Levy etc We also request clarification on what constitutes ‘FX transactions’ to be taxed and the treatment of banks that may incur losses rather than gains during this period. We urge the government to provide clear guidelines on this matter to avoid further uncertainty.”
BDAN also argued that Nigerian banks were amongst the most heavily taxed in the world due to the burden of the Asset Management Corporation of Nigeria levy which is imposed on the total assets of banks.
It, therefore, called on the National Assembly to revisit the amendment and engage in constructive discussions with stakeholders in the banking sector.
