Anan And Citn Express Support For The Nigerian Government’S Windfall Tax On Foreign Exchange.

The federal government’s decision to impose a 70 percent windfall tax on foreign exchange (FX) gains earned by banks has received praise from the Association of National Accountants of Nigeria (ANAN) and the Chartered Institute of Taxation of Nigeria (CITN).

During the CITN 4th Joint Council Retreat in Abuja on Friday, both professional bodies expressed their support for this policy.

In an effort to finance major infrastructure projects, education, healthcare, and other sectors, President Bola Tinubu recently urged the National Assembly to amend the 2023 Finance Act in order to introduce a one-time windfall tax of 50 percent on banks’ FX gains.

Mr. Samuel Agbeluyi, the President and Chairman of Council of CITN, stated during the retreat that this new tax policy will help address the widening fiscal deficit and strengthen national revenue in the face of ongoing economic challenges.

Agbeluyi emphasized that the tax is necessary to ensure a fair distribution of economic benefits, considering the significant advantages banks have gained from fluctuations in the FX market.

He justified the windfall tax by comparing it to a prosperity tax enacted during the pandemic, explaining that successful businesses should contribute a portion of their prosperity to support less fortunate sectors of the economy:

“We congratulate banks for their success. However, if they continue to thrive while other sectors are struggling and the government allows this disparity, it could lead to widespread economic collapse in the near future. Therefore, let us share in your prosperity.”

The President of CITN stressed that the windfall tax should not be viewed as punitive, as it will benefit the entire economy by enabling companies to thrive, expand their operations, and contribute further to the country’s growth.

Dr. James Ekerare Neminebor, the President and Chairman of the Council of ANAN, also criticized Nigeria’s current tax structure but commended President Bola Tinubu for his commitment to reforming the nation’s complex tax system.

Supporting the windfall tax, Neminebor emphasized that it is important to distribute wealth fairly and ensure that the tax burden is not excessive for the individuals and businesses paying it.

Neminebor also praised the recent removal of withholding tax on educational materials and medical facilities, recognizing it as a positive step for the country.