Nigeria: CITN and ANAN Endorse Government’s Windfall Tax, Highlight Benefits for National Revenue

The Chartered Institute of Taxation of Nigeria (CITN) and the Association of National Accountants of Nigeria (ANAN) have endorsed the federal government’s decision to impose a 70 percent windfall tax on foreign exchange (FX) gains earned by banks.

Speaking at the associations’ 4th Joint Council Retreat in Abuja, Mr. Samuel Agbeluyi, President and Chairman of the CITN Council, praised the new tax policy as a vital step in addressing Nigeria’s fiscal deficit and enhancing national revenue amidst prevailing economic difficulties.

Agbeluyi emphasized that the windfall tax was essential for equitable distribution of economic benefits, noting that banks have notably profited from FX market fluctuations.

“Windfall tax is not a new concept; it’s akin to a prosperity tax. For instance, during the COVID-19 pandemic, certain sectors like telecommunications thrived while others struggled. If you are flourishing due to economic conditions that have adversely affected others, contributing a portion of your gains is only fair,” Agbeluyi remarked.

He stressed that the purpose of taxation is to distribute wealth more evenly and prevent economic disparity. “If one sector is thriving while others are struggling, it’s crucial for those doing well to contribute to the broader economic stability. We commend the banks for their success, but we must ensure that prosperity is shared fairly,” he added.

Agbeluyi also called on the government to ensure that the revenue from this tax is utilized effectively for the public good.

Dr. James Ekerare Neminebor, President and Chairman of the ANAN Council, also supported the windfall tax while expressing concerns about Nigeria’s existing tax structure. Neminebor criticized the overlap in tax responsibilities across various sectors and lauded President Bola Tinubu’s efforts to reform the tax system.

“It’s about equitable distribution of wealth. Those who can afford to pay taxes should do so, but the burden should not be excessive. The recent removal of withholding tax on educational materials and medical services is a positive step,” Neminebor stated.

This endorsement from CITN and ANAN follows the National Assembly’s recent revelation that President Tinubu proposed an amendment to the 2023 Finance Act, aiming to levy a one-time 50 percent windfall tax on banks’ FX gains from the previous year. The president has indicated that the proceeds will support infrastructure projects, education, and healthcare among other critical areas.