Bank directors ask National Assembly to revisit 70% windfall tax

… Urges FG to provide clear guidelines

Bank Directors Association of Nigeria (BDAN) has urged the National Assembly to revisit the 70 per cent windfall tax imposed on commercial banks and engage with the lenders on the amendment.

Mustafa Chike-Obi, Chairman, of the Board of Directors said in a statement sent by BusinessDay. He said while the imposition of this windfall tax appears to be a response to the current economic climate, BDAN suggests that a 70 per cent tax rate is excessively burdensome and ill-timed, particularly considering the ongoing bank recapitalisation efforts.

“Such a high levy has the potential to stifle growth and innovation within the banking sector; ultimately affecting the quality of services we provide to our customers and the broader economy,” he said.

“We acknowledge and respect the intentions of the government in implementing this decision; however, we feel it is essential to express our concerns regarding the magnitude of the levy, its timing and the ambiguities surrounding its implementation.

“In view of these concerns, we respectfully urge the National Assembly to revisit this amendment and engage in constructive discussions with stakeholders in the banking sector. By collaborating, we can develop a framework that effectively balances the need for revenue generation with the imperative of fostering a thriving banking environment that supports sustainable economic growth,” Chike-Obi said.

His words: “Moreover, we believe that it is vital for all stakeholders in the banking sector to have been consulted before the enactment of such significant changes in the Finance Act 2023. Open dialogue and negotiation are essential to ensure that policies are both equitable and effective.

“A primary concern lies in the ambiguities of the language in this amendment which leave critical questions unanswered. Such as, whether the windfall tax will be implemented as a Total Tax charge on banks, incorporating other taxes already levied such as Company Income tax, Tertiary Education Tax, National Information Development Levy (NITDL), etc We also request clarification on what constitutes “FX transactions” to be taxed and the treatment of banks that may incur losses rather than gains during this period. We urge the government to provide clear guidelines on this matter to avoid further uncertainty.

“Additionally, it is important to highlight that Nigerian banks are amongst the most heavily taxed in the world due to the burden of the AMCON levy which is imposed on the total assets of banks. We therefore recommend that a consolidation of all taxes and levies imposed on banks be thoroughly considered in the future.

According to him, it would also be critical to reassure the banking community that future levies and taxes will not be arbitrarily imposed.

“We commend the Central Bank of Nigeria for their recent efforts in stabilising the banking sector; we remain committed to supporting and collaborating with regulators, government entities, and other stakeholders to find solutions that benefit all parties involved,” he said.