NASS grants FG lion share of Bank Windfall profits

The National Assembly has passed amendment to 2023 Finance Act with a proposed sharing formula that would allow the Federal Government to keep a lion share of 70% of the Windfall levy imposed on all foreign exchange transactions by banks in the country.

By Haruna Salami

The National Assembly has passed amendment to 2023 Finance Act with a proposed sharing formula that would allow the Federal Government to keep a lion share of 70% of the Windfall levy imposed on all foreign exchange transactions by banks in the country.

The levy which takes effect from January 2024 was sequel to
Adoption of the report of its Joint Committee on Finance which also recommends a 10% penalty on defaulters who fail to remit government’s share of the Windfall Profit levy into the federation account.

Both chambers of the National Assembly agreed that a lion share of 70% of the windfall profit levy imposed on banks should go to the Federal Government, leaving the banks with the remaining 30%.

The National Assembly reached the sharing formula after it considered the report of its committee on Finance.

President Bola Tinubu had last week requested the National Assembly to amend the Finance Act that seeks to impose 50% Windfall Profit levy on all the foreign exchange transactions by banks in the country.

Interestingly, while the Federal Government had proposed a 50-50 sharing formula, the lawmakers increased the share of the Federal Government to 70%.

The windfall profit levy is to take effect from January 2024 with the National Assembly carefully avoiding making a retrospective law that would include 2023.

The Minister of Finance, Wale Edun has in the last two days led the FG economic team to defend the windfall profit levy, which he said is primarily aimed at redistributing money the surplus gains earned by banks as a result of change in government foreign exchange policy.

Although the banks were conspicuously absent at both Monday and Tuesday meetings, the Governor of Central Bank of Nigeria, who was represented at the stakeholders meeting on Tuesday supported the Windfall Profit levy, confirming that its earlier circular in March asking banks not to tamper with the windfall profits subsists.

The amendment by the National Assembly also imposed a 10% penalty on defaulters of the windfall profit levy at prevailing interest rate.

The Chairman, Federal Inland Revenue Service (FIRS), Zacch Adedeji, said the absence and silence of the banks on the matter can be taken as “consent”.