The Bank Directors Association of Nigeria (BDAN) has urged the Federal Government to reconsider its planned 70 per cent windfall tax on banks’ earnings from foreign exchange transactions, describing the levy as, “excessively burdensome and ill-timed”…..For More READ THE FULL ARTICLE HERE ▶▶...CLICK HERE TO CONTINUE READING.>>
The Presidency had on July 17 announced that President Bola Tinubu requested the National Assembly to amend the 2023 Finance Act to impose a one-time windfall tax of 50 percent on banks’ FX gains last year.
Thank you for reading this post, don't forget to subscribe!Tinubu said the windfall tax will be used to finance infrastructure projects, education and healthcare, among others. The National Assembly passed the bill on Tuesday after increasing the windfall tax to 70 percent, with retroactive application from January 1, 2023.
The development sparked concerns in the banking sector, as analysts warned about its timing and the potential negative impact it could have on ongoing recapitalisation efforts.
However, the Chairmen of FBN Holdings and UBA- Femi Otedola and Tony Elumelu, respectively backed the windfall tax.
But BDAN distanced itself from the views of the bank chairmen and announced that it would state its position on the issue after its meeting on Monday.
In a statement at the end of the meeting, the Chairman of BDAN, Mustafa Chike-Obi, said the high tax rate could stifle growth and innovation within the banking industry, ultimately affecting the quality of financial services available to customers and the broader economy.
Chike-Obi, who is also the chairman of Fidelity Bank, also said that there ought to have been greater consultation and dialogue between the government and stakeholders in the banking sector before the levy was introduced.
The statement partly read: “We, the Bank Directors Association of Nigeria (LTD/GTE) wish to formally address the recent imposition of a 70 per cent levy on the profits realised from foreign exchange transactions by banks for the financial years 2023 to 2025.
“We acknowledge and respect the intentions of the government in implementing this decision; however, we feel it is essential to express our concerns regarding the magnitude of the levy, its timing and the ambiguities surrounding its implementation.
“While the imposition of this windfall tax appears to be a response to the current economic climate, we suggest that a 70 per cent tax rate is excessively burdensome and ill-timed, particularly considering the ongoing bank recapitalisation efforts.
“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.”….For More READ THE FULL ARTICLE HERE ▶▶
