Bank chief rejects ‘untimely and onerous’ windfall tax

The Bank Directors Association of Nigeria (BDAN) has opposed the recently signed windfall tax introduced by the Federal Government.

The association described it as “excessively burdensome and ill-timed”.

In a recent statement by its chairman, Mustapha Chike-Obi, BDAN warned that high tax rates would stifle growth and innovation in the banking industry.

Chike-Obi is also the chairman of Fidelity Bank Plc.

This, the association said, would ultimately impact the quality of financial services available to customers and the wider economy.

The directors stressed the need for greater consultation and dialogue between the government and stakeholders in the banking sector before implementing such significant changes.

The statement read: “We, the Nigerian Bank Directors Association (LTD/GTE) wish to formally discuss the imposition of a 70 per cent tax on profits made from foreign exchange transactions by banks for the financial years 2023 to 2025.

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“We acknowledge and respect the government’s intentions in implementing this decision; however, we feel it is important to raise our concerns regarding the magnitude of the levy, its timing, and the ambiguity surrounding its implementation.

“While this unexpected tax imposition appears to be a response to the current economic climate, we believe that the 70 percent tax rate is too onerous and ill-timed, especially considering the ongoing bank recapitalization efforts.

“Such high tax rates have the potential to stifle growth and innovation in the banking sector; ultimately affecting the quality of service we provide to our customers and the economy at large.

“In addition, we believe that it is critical for all stakeholders in the banking sector to be consulted before any significant changes in the Finance Act 2023 are introduced. Open dialogue and negotiation are essential to ensure that policies are fair and effective.

“The main concern lies in the ambiguity of the language in this amendment which leaves important questions unanswered. Like, will the windfall tax be applied as a Total Tax burden on banks, combining other taxes already levied such as Corporate Income Tax, Higher Education Tax, National Information Development Levy (NITDL), etc.”

BDAN also asked for clarification on what constitutes “foreign exchange transactions” that are subject to tax and the treatment of banks that may have incurred losses instead of profits during this period.

“We urge the government to provide clear guidelines on this issue to avoid further uncertainty,” the statement added.

‘Very burdensome and untimely,’ Bank director rejects windfall tax first appeared on Latest Nigeria News | Headlines from Ripples Nigeria.