The Nigerian Senate has approved an amendment to the Finance Act of 2023, increasing the windfall levy on banks’ foreign exchange gains from 50% to 70%.
The bill was passed during a plenary session on Tuesday after a thorough review by the Finance Committee.
The Senate’s decision aims to address the significant profits banks have accrued due to recent foreign exchange policy shifts.
This windfall is viewed as a product of government intervention rather than the banks’ strategic efforts, prompting the call for redistribution.
The additional revenue from this levy is expected to contribute to financing the N6.2 trillion Appropriation Amendment Bill.
This funding will support various government projects and initiatives, ensuring that the windfall benefits are reinvested into the economy.
The Senate also approved amendments to the payment timeline, setting the levy to take effect from the start of the new foreign exchange regime through 2025, avoiding retrospective application from January 2024.
Also, the Upper Chamber removed the proposed jail term for principal officers of defaulting banks.
Instead, banks that fail to remit the levy will incur a penalty of 10% per annum on the withheld amount, alongside interest at the prevailing Central Bank of Nigeria (CBN) Minimum Rediscount Rate.
This legislative move aligns with President Tinubu’s broader fiscal strategy, which aims to optimize national revenue through independent sources.
The amendment underscores the Senate’s commitment to leveraging bank profits for national development, especially amid economic challenges.
While some industry stakeholders express concerns about the impact on banking operations, others see this as a necessary step towards equitable wealth distribution and economic stability.
The bill’s passage is anticipated to have significant implications for both the financial sector and the broader economy.
