President Bola Tinubu held a closed-door meeting on Wednesday with representatives of Nigeria’s commercial banking sector at the State House in Abuja to discuss the recently imposed Windfall Tax.
The team, led by Minister of Finance and Coordinating Minister of the Economy, Wale Edun, included United Bank for Africa Chairman, Mr. Tony Elumelu, and First City Monument Bank Group Chief Executive Officer, Ladi Balogun.
Following the meeting, Edun briefed State House correspondents on discussions regarding the banking sector’s role in promoting economic growth.
The Chairman of the Federal Inland Revenue Service, Mr. Zacch Adedeji, explained the government’s plan to simplify the tax regime by taxing only profits and allowing companies’ capital to grow.
In mid-July, President Tinubu introduced a one-time windfall tax targeting the substantial foreign exchange gains reported by banks in 2023 as part of an amendment to the 2023 Finance Act.
The aim of this tax is to generate additional revenue for crucial infrastructure, education, and healthcare projects under Tinubu’s Renewed Hope Agenda, specifically focusing on the significant profits banks made due to the naira’s devaluation in 2023.
Despite the controversy surrounding the proposal, with concerns raised by Moody’s Investors Service and analysts about its potential negative impact on the banking sector, the Senate passed the amendment bill.
This bill increased the windfall levy from 50% to 70% and extended its applicability until 2025 for all profits from FX transactions.
Critics have warned about potential legal challenges and the transfer of the tax burden to bank customers due to the retroactive nature of the tax.
Edun emphasized the government’s intention to redistribute wealth by imposing the windfall levy on the banking system and clarified the reform’s goal of making the tax regime more efficient and less costly for taxpayers.
Following the meeting, bankers assured Tinubu of their compliance with the windfall levy, aligning with the administration’s reform agenda to democratize prosperity and alleviate poverty.
UBA Chief, Elumelu, stressed the importance of mutual prosperity in sustaining the system, creating jobs, and benefiting investors for a prosperous society.
FCMB Chief, Balogun, expressed confidence in the Tinubu administration’s support for stakeholders, promoting growth and investment in alignment with the government’s reform agenda.