The Bank Directors Association of Nigeria (BDAN) has condemned the proposed 70% windfall tax on profits from foreign exchange transactions by banks, calling it both excessive and poorly timed. In a press statement released following their board meeting on Monday, the association expressed concern over the scale and implementation of the tax.
Mustafa Chike-Obi, Chairman of the Board of Directors of BDAN, stated, “While we understand the government’s intention behind this windfall tax, a 70% levy is excessively burdensome and ill-timed, especially in the midst of ongoing bank recapitalization efforts. Such a high rate could hinder growth and innovation within the banking sector, potentially impacting the quality of services and broader economic stability.”
BDAN also criticized the lack of stakeholder consultation prior to the enactment of the Finance Act 2023, arguing that open dialogue is crucial for developing equitable and effective policies. The association raised concerns about the ambiguities in the tax amendment, particularly regarding the scope of the tax, its interaction with other taxes, and the treatment of banks that may experience losses rather than profits.
“The ambiguity in the amendment leaves several questions unanswered,” Chike-Obi added. “We need clarification on whether the windfall tax will be applied in addition to existing taxes, and a clear definition of what constitutes ‘FX transactions’ subject to the tax. Guidelines are essential to prevent further uncertainty.”
BDAN highlighted that Nigerian banks are already among the most heavily taxed globally, due in part to the Asset Management Corporation of Nigeria levy on total bank assets. The association urged the National Assembly to reconsider the amendment and engage with banking sector stakeholders to find a balanced approach that supports both revenue generation and a healthy banking environment.
The association also noted that earlier this month, it distanced itself from the personal views of some bank chairmen who had expressed support for the proposed tax.
