The Nigerian government has announced plans to implement a 50% tax on the profits banks earned from foreign exchange revaluation in 2023, in order to fund an increase in workers’ minimum wage.
This was disclosed by President Bola Tinubu in a proposed change to the 2023 Finance Act, submitted to the National Assembly for approval.
“The government intends to implement a 50 percent tax on the profits that banks earn from foreign exchange revaluation in the year 2023,” said Imran Muhammed, an All Progressives Congress member.
“There shall be levied and paid to the benefit of the Federal Government of Nigeria a tax of 50 percent on the realized profits from all foreign exchange transactions of banks within the 2023 financial year.”
The proposed tax is part of a N6.2 trillion 2024 supplementary budget, which includes N3 trillion recurrent expenditure and N3.2 trillion capital expenditure. The N3 trillion recurrent expenditure is expected to tackle the country’s minimum wage impasse.
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The Central Bank of Nigeria’s decision to float the Naira at the foreign exchange market on June 14, 2023, led to the devaluation of the country’s currency, necessitating this move.
The government’s plan to implement a windfall tax on foreign exchange gains by Nigerian banks aims to ensure that the benefits of the devaluation are shared fairly among all stakeholders.
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