The Chartered Institute of Directors Nigeria (CIoD) says the 70 per cent windfall tax on profits generated from foreign exchange transactions by banks from 2023 to 2025 is against the overriding philosophy of Nigeria’s Tax Policy. Mr Bamidele Alimi, DirectorGeneral, CIoD, said this in Lagos in reaction to the National Assembly’s approval of Windfall Tax from an initial 50 per cent proposed by President Bola Tinubu to boost the nation’s coffers.....CONTINUE READING THE ARTICLE FROM THE SOURCE
Alimi noted that the Nigerian Tax Policy grounded in the principles of equity, efficiency, and simplicity, was geared towards creating an enabling environment for businesses to thrive and promoting investment.
He said the windfall tax successful implementation in some advanced countries was not enough reason for a wholesome application in Nigeria at the moment, because it negates the overriding philosophy of Nigeria’s Tax Policy.
Alimi stated that having to remit windfall tax for the 2023 financial year when audited re – ports had been submitted and dividends allocated to shareholders was ill-timed.
He added that banks were currently engaged in recapitalisation to meet the Central Bank of Nigeria’s (CBN) minimum capital requirements.
According to him, the imposition of such a high tax could divert essential funds away from these efforts, hampering banks’ ability to strengthen their capital bases.
“The financial year of banks ends in December 2023 and expectedly, banks are to submit their Audited Reports to the Central Bank of Nigeria (CBN) and other stakeholders by March 31, 2024 and publish not later than 21 days after submission.
“This implies that all the banks must have done this to avoid sanctions and dividends allocated to shareholders so to have them remit the 2023 windfall tax on foreign exchange transactions, after all these activities, is nothing but retroactive.
“This is particularly concerning given the strict definitions of paid-up share capital, which leaves banks with limited options for raising necessary funds. A high windfall tax could lead to a decline in share prices, further complicating their financial stability,” he said.
