The administration of President Bola Ahmed Tinubu has proposed an amendment to the 2023 Finance Act to tax banks 50% of profit realised from foreign exchange revaluation in 2023.
If approved by the National Assembly, the tax could potentially fetch the Nigerian government not less than N2 trillion.
Punch reports that the tax will be debited from banks’ forex windfall in 2023 to fund part of the 2024 supplementary budget.
According to the Nation report, the levy on forex revaluation gains, otherwise known as a windfall, will finance “renewed hope” infrastructure projects, education and healthcare.
Following the decision of the Central Bank of Nigeria to adopt a more liberal foreign exchange management system in 2023, the naira depreciated from N461.1/US$ in December 2022 to N951.79/US$ (Nigerian Autonomous Foreign Exchange Rate Fixing) in December 2023.
This movement helped Nigerian banks make estimated forex revaluation gains at about N4 trillion in 2023.
The banks could make so much due to their foreign assets.
Regarding the development, Wale Ajayi, PMG Partner and Head, Tax, Regulatory and People, described the federal government decision as surprising and expected legal disputes.
TimesNow.com.ng earlier reported that the demand for foreign exchange by individuals and companies engaged in importation and other forex-related activities decreased by 42% year-on-year.
The total sectoral utilisation of foreign exchange indicated that 19 sectors and services received $21.12 billion in forex allocations in 2023.
This represented a 41.9% decline, or $8.87 billion, compared to the $29.98 billion allocated in 2022.
Source: TimesNow.com.ng
