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President Bola Tinubu of Nigeria has requested the National Assembly to amend the 2024 Finance Act to impose a tax on the foreign exchange (FX) gains realized by traditional banks. The proceeds from this tax will be directed towards funding capital infrastructure development, education, healthcare, and welfare projects.
In the first nine months of 2023, nine of Nigeria’s leading banks recorded over ₦2 trillion in FX gains following the Central Bank of Nigeria’s (CBN) decision to float the naira and unify the multiple exchange rate markets. In September 2023, the CBN prohibited commercial banks from using these gains for dividend payments or operational expenses.
This proposed one-time windfall tax is part of an amendment to the Finance Bill, which seeks to increase revenue by ₦6.2 trillion, as outlined in a letter from President Tinubu to lawmakers on Wednesday.
The tax initiative is a key component of the Tinubu administration’s plan to enhance revenue collection to support the Renewed Hope agenda, which aims to lift 100 million people out of poverty.
According to Bloomberg, Nigeria’s tax collection agency, the Federal Inland Revenue Service (FIRS), anticipates a 57% increase in revenue in 2024. Despite this, Nigeria continues to have one of the lowest tax-to-GDP ratios globally.
In January 2024, President Tinubu signed the ₦28.7 trillion 2024 budget into law. He is now seeking the National Assembly’s approval for an additional ₦6.2 trillion: ₦3.2 trillion for infrastructure projects and ₦3 trillion for recurrent expenditure.
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