By Tonia Okereke
Six banks have paid about N205.59bn as windfall tax in the 2024 financial year.
According to the audited reports filed with the Nigerian Exchange Limited, the banks have commenced with complying with the new regulation.
The banks that have reported payments include Zenith Bank, United Bank for Africa, Fidelity Bank, Wema Bank, Stanbic IBTC Holdings, and Guaranty Trust Holding Company, the Punch reports.
The audited reports revealed that of the six financial institutions, Zenith Bank paid the highest windfall tax of N63.31bn, followed by UBA, which paid N57.91bn, the newspaper further reported.
A breakdown of the report showed that UBA paid N57.91bn for two years, 2023 and 2024, and provided a breakdown of the payment, saying, “Following a series of engagements, provision of information, and reconciliation meetings with the Federal Internal Revenue Service, a provisional Windfall Levy of N57.91bn was estimated to be payable by the bank for the 2023 and 2024 financial years, broken down as follows: FY2023: N24.819bn and FY2024: N33.092bn.”
GTCO paid N51.25bn as a windfall tax; Stanbic IBTC Holdings paid N17.18bn, and Fidelity Bank paid N13.33bn in the 2024 financial year.
“The Act imposes a 70 per cent levy in retrospect for the 2023 financial period, 2024, and 2025 on foreign exchange gains from the impact of foreign exchange on financial instruments as a result of currency floating by the apex bank (CBN). The sum of N5.71bn of the N13.33bn relates to gains realised in the 2023 financial year,” said Fidelity Bank in its audited report.
According to the paper, Wema Bank paid N2.62bn as windfall levy in the 2024 financial year. The bank indicated in its annual report that this was about three per cent of its profit before tax, which was N102.52bn.
Recall that in July 2024, the National Assembly passed a bill that was assented to by President Bola Tinubu in August 2024. By the Finance (Amendment) Act 2023, the windfall tax imposes and charges a windfall levy on money deposited in banks in Nigeria.
The tax specifically targets the significant profits banks made due to the naira’s devaluation in mid-2023 and a move to raise the tax revenue’s share of the gross domestic product to 18 per cent from 11 per cent within three years.
A windfall tax is a higher tax levied by the government on sectors or businesses that have disproportionately benefited from favourable market conditions rather than the company’s efforts.
The 2023 fiscal year was marked by a major devaluation of the naira against other foreign currencies, implying that Nigerian money deposit banks that held FX assets on their books reported significant unrealised FX gains on transactions in foreign currencies upon translation to naira and realised FX gains upon disposal of assets (e.g., cash, stocks, bonds, etc.) or settlement of transactions in foreign currencies.
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