Nigerian banks owe FG N600bn, clear N205.6bn in windfall tax

Nigerian banks still owe the federal government N600 billion in windfall tax.

This comes as six Nigerian banks have paid about N205.6 billion as a windfall in the 2024 financial year, an audit report filed with the Nigerian Exchange Limited showed.

Meanwhile, the N205.6bn windfall tax by Nigerian banks fell short of the expected N1 trillion windfall tax accrued to the Federal Government, according to sources familiar with the development.

According to audit reports filed with NGX, 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. Stanbic IBTC Holdings and GTCO are the parent companies of Stanbic IBTC Bank and Guaranty Trust Bank, respectively.

Accordingly, the audit reports revealed that of the six financial institutions, Zenith Bank paid the highest windfall tax of N63.31 billion, followed by UBA, which paid N57.91 billion.

Further analysis of the UBA audit report showed that the N57.91 billion that the group paid was 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 N57.91 billion was estimated to be payable by the bank for the 2023 and 2024 financial years, broken down as follows: FY2023: N24.819 billion and FY2024: N33.092 billion.”;

On their part, GTCO paid N51.25 billion 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 percent levy in retrospect for the 2023, 2024, and 2025 financial periods 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 N13.33 billion relates to gains realised in the 2023 financial year,”; said Fidelity Bank in its audited report.

Meanwhile, there are speculations that bank chief executive officers are lobbying with the Nigerian presidency to reduce the windfall tax.

The development comes as international rating company Moody’s has raised concerns about the windfall tax.

In a report titled ‘Nigeria’s Proposed Windfall Tax on Foreign Exchange Gains is Credit Negative for Banks, Moody condemned the windfall tax.

“The windfall tax will have a particularly negative effect on banks whose capital adequacy is close to regulatory thresholds. The tax follows record profits declared by banks in 2023, largely because of foreign-currency revaluation gains related to the naira’s massive devaluation of 37 percent in June 2023,” Moody’s stated.