Business

Moody’s Raises Concerns Over Nigeria’s Proposed Windfall Tax on Bank’s Foreign Exchange Gains 

The Nigerian government’s has proposed 50% windfall tax on foreign exchange revaluation profits of banks has been met with criticism from Moody’s Ratings, citing it as credit negative for the sector.

The new tax was announced on July 17, as part of a NGN6.2 trillion ($4 billion) budget addition for 2024, aimed at funding infrastructure and critical spending.

The tax is expected to significantly reduce banks’ profits available for problem-loan provisioning and transfers to retained earnings, a crucial component of regulatory capital, thereby posing a challenge to banks’ financial stability.

The tax follows record profits declared by banks in 2023, largely due to foreign-currency revaluation gains related to the naira’s 37% devaluation in June 2023.

However, the severity of the negative effect on banks’ foreign-currency-related profits is unclear, given the lack of details on how the tax would be applied.

Moody’s estimated that the tax could yield revenue of up to 0.3% of 2024 GDP for the government’s small tax intake of around 9% of GDP in 2023, but noted that it remained a marginal and temporary revenue measure.

The central bank has yet to comment on the tax, but approval is expected before the end of July.

Banks would need to comply with the windfall tax directive by December 31, 2024, or face penalties of 10% per year on the tax amount due, plus interest at the monetary policy rate currently 26.25%. Principal officers of noncompliant banks may also face up to three years in prison.

The move has raised concerns among investors and analysts, who fear it could negatively impact the banking sector’s ability to absorb potential losses and maintain regulatory capital requirements.

Boluwatife enome

Follow us on:

AriseNews

View Comments

  • ✅Very Sharp Super Clean Direct Tokumbo
    ✅CONDITION; Super Clean, Strictly Buy And Drive, Nothing To Fix.
    nationwide action sales Toyota 4Runner: #900,000
    Toyota Avalon: #800,000
    Toyota Camry: #550,000
    TOYOTA TUNDRA = 2. MILLION
    TOYOTA CAMRY SPIDER =1m900,000
    TOYOTA CAMRY MUZZLE =1m800,000
    Toyota Corolla: #500,000
    Toyota FJ Cruiser: #800,000
    Toyota Highlander: #1m300,000
    Toyota Land Cruiser-N1.5 million
    Toyota Prado N1m650,000
    Toyota Matrix: #650,000
    Toyota hilux: #1m650,000
    Dyna Truck – N1.3million
    Nissan part finder: #850,000
    Nissan Murano: #850,000
    Honda Accord: 550,000
    ACURA ZDX=2.3 MILLION
    ACURA MDX = 1.6 MILLION
    Lexus Rx300,330,350,950,1m350: 2m000,000
    Latest Model Toyota Prado N1m650, 000
    Latest Model Toyota Rav4 N900,000
    Latest Model Toyota Sienna#600 N800,000
    Latest Model Toyota Venza N1m800,000
    Latest Model Toyota Yaris N800,000
    TOYOTA COROLLA SPORT= 900,000
    Volkswagen Golf 3 N300,000
    Volkswagen Golf 4 N500,000
    Volkswagen Jetta N900,000
    Volkswagen Beetle N800, 00
    Volkswagen Passat N900,000
    Mazda MPV N950,000
    Mazda 626 N850.000
    Mazda Tribute N400.000
    Mercedes-Benz C-Class N1m700.000
    Mercedes-Benz E-Class N1m650.000
    Mercedes-Benz GLK N3m750.000
    Mercedes-Benz ML320 N1m800.000
    Mercedes-Benz ML350 N1m900.000
    Mercedes - Benz G-Wagon N5m,200000 and Others
    Mercedes Benz Not Included On List ...
    Mistibushi N600,000
    Nissan Primera N980,000
    Nissan Sentra N950,000
    Nissan Sunny N950,000
    Nissan Armanda N850.000
    Nissan Xterra N900,000
    Nissan Quest N800,000
    Peugeot 206 N700.000
    Peugeot 406 N850,000
    Peugeot 607 N870,000
    Peugeot 407 N950,000
    Call the Marketing officer Compt. on WE DELIVER TO ANY STATE IN NIGERIA PER BAG IS N2000 FOR DELIVERY. Thank you!(( 08O67399O90) (+234_80__6739-9090))
    !!!Please Take Note!!!
    #50kg Bags Of Rice And There Prices Below.
    Royal Stallion=N19,500
    MamaGold=N18,000
    Otunba=N19,000
    Rising sun=N19,500
    Special rice=N18,000
    Mama Africa=N19,000
    Royal crown=N18,500
    Ade Brazil=N19,000
    Elephant Gold=N18,500
    Super eagle=N19,000
    Tomato rice=N18,500
    Caprice =N18,500WE DELIVER TO ANY STATE IN NIGERIA PER BAG IS N2000 FOR DELIVERY. Thank you!!

Recent Posts

German Consulate Hosts Unity Day In Lagos as Diplomatic Ties Bloom

The 34th anniversary of German Unity celebrated in Lagos, was hosted by Consul General Weert…

2 hours ago

Matt Gaetz To Exit Congress Following Withdrawal As DOJ Nominee Amid Controversy

Matt Gaetz has said he will not return to Congress after withdrawing as Trump’s DOJ…

4 hours ago

Tinubu Seeks Senate Approval For Oluyede As Chief Of Army Staff

President Tinubu has sought Senate confirmation of Olufemi Oluyede as Chief of Army Staff, citing…

4 hours ago

Netanyahu Risks Arrest in UK as ICC Issues Warrant Against Him For War Crimes

Israeli PM Netanyahu faces potential arrest in the UK as Downing Street pledges to fulfill…

7 hours ago

Second Australian Teen Dies from Suspected Methanol Poisoning in Laos

A second Australian teenager has died of suspected methanol poisoning in Laos, bringing to six…

7 hours ago

Simon Ekpa Arrested, Denies Being IPOB Leader + Atiku Says Tinubu’s Loans Are Bone-Crushing – Trending With Ojy Okpe

https://www.youtube.com/watch?v=mFlFl1mPGC8 The arrest of self-proclaimed Prime minister of the Biafra Republic, Simon Ekpa who was…

8 hours ago