The Nigerian Senate made some big changes yesterday. They changed the 2023 Finance Act. Now, banks have to pay more money, called a windfall levy, on the money they make from foreign currency. It went up from 50% to 70%.
Sen. Sani Musa, who helps check money matters, read a report before they agreed to the changes.
They also decided that the new rules will start when the new foreign exchange policy starts, not back on January 1, 2023. This change was made because Sen. Aminu Waziri Tambuwal said it was not fair to make the rules start from the past.
The Senate also said that banks will have to pay the windfall levy on all their profits from foreign exchange until the end of 2025. This is different from what was first planned, which was to stop the levy at the end of 2023.
On June 14, 2023, the Central Bank of Nigeria started a new foreign exchange policy. This means all the markets for foreign exchange are now joined together.
The Senate didn’t stop there. They also added N6.2 trillion to the 2024 budget. This money will be used for paying higher salaries and fixing important things across Nigeria.
Background Information
Earlier, President Bola Tinubu asked the Senate to change the 2023 Finance Act. He wanted banks to pay a one-time tax on the money they make from revaluing foreign exchange profits in the year 2023.
The new rule says that if banks don’t pay the tax, they will have to pay more money and may even face jail time for key officials.
Reactions to the Changes
Many people and organizations have talked about these changes. They are worried about when and how these new rules will work.
KPMG Nigeria, a big company that gives advice on taxes, said the 50% windfall tax on banks’ foreign exchange profits could cause legal problems. They said Nigeria’s tax rules don’t usually go back in time.
PwC Nigeria also worried that this new tax could make people not want to invest money in the country because of the sudden change.
A well-known lawyer, Dr. Olisa Agbakoba, said the Finance Act change is a bad idea. He thinks it is too much for the National Assembly to decide, and it will make things harder for the banks’ customers.