Nigerian Bank Directors Reject Tinubu Government’s Proposed 70% Tax On Forex Transaction Profits

Chairman of the Board of Directors, emphasised that although the tax appeared to address current economic challenges, a 70 percent rate could be excessively burdensome and disruptive, especially amidst ongoing bank recapitalization efforts.

The Bank Directors Association of Nigeria (BDAN) has criticised the proposed 70 percent windfall tax on profits from foreign exchange transactions by banks, labelling it as excessive and poorly timed.

In a press statement issued following their board meeting on Monday, the association acknowledged the President Bola Tinubu-led government’s intentions but expressed concerns about the tax’s scale, timing, and implementation details. 

Mustafa Chike-Obi, the Chairman of the Board of Directors, emphasised that although the tax appeared to address current economic challenges, a 70 percent rate could be excessively burdensome and disruptive, especially amidst ongoing bank recapitalization efforts. 

He warned that such a high levy might hinder growth and innovation in the banking sector, potentially impacting the quality of services for customers and the broader economy.

Chike-Obi also highlighted the importance of consulting all banking sector stakeholders before enacting significant changes like those in the Finance Act 2023. 

He argued that open dialogue was crucial for developing fair and effective policies. 

BDAN’s main concerns include the lack of clarity about whether the windfall tax will be applied in addition to other taxes such as Company Income Tax and the Tertiary Education Tax, as well as the definition of ‘FX transactions’ to be taxed and the treatment of banks that might experience losses.

The association also pointed out that Nigerian banks are already among the most heavily taxed globally due to existing levies like the Asset Management Corporation of Nigeria (AMCON) levy on total bank assets. 

BDAN urged the National Assembly to review this amendment and engage in constructive discussions with banking sector stakeholders to create a balanced framework that promotes both revenue generation and a robust banking environment for sustainable economic growth.

Earlier this month, BDAN had distanced itself from the opinions of certain bank chairmen who supported the proposed foreign exchange windfall tax.