SHAREHOLDERS associations have vowed to deploy every legal means to resist the federal government’s plan to impose a windfall tax on foreign exchange gains made by Nigerian banks. 

The national leaders of the Progressive Shareholders Association of Nigeria (PSAN) and New Dimension Shareholders told The ICIR  that the proposed plan was unacceptable.

While maintaining that the plan was unjustifiable, they said it would negatively affect the financial performance of banks, and reduce shareholders’ funds.

On Wednesday, July 17, in a proposed amendment to the 2023 Finance Act,  President Bola Tinubu sought the approval of the National Assembly for a 50 per cent tax on the realised profits from all foreign exchange transactions of banks within the 2023 financial year.

The revenues, termed ‘windfall tax’ as stated in the letter from the president to the senate, are to be deployed to “Renewed Hope” infrastructure, education, and healthcare projects.

According to the letter, the Federal Inland Revenue Service (FIRS) shall collect the tax on the foreign exchange gains, The ICIR reported.

It recalled that on September 11, 2023, CBN issued a directive to banks not to utilise the FX revaluation gains to pay dividends or meet operating expenses but use it as a buffer to cushion significant movement in the FX rate. It reiterated this in March this year.

In the proposed amendment, the federal government stated that banks’ principal officers risk imprisonment should the lender fail to comply.

‘It’s immoral’

Reacting to the development, the national president of New Dimension Shareholders, Patrick Ajudua, said the government’s decision to impose a windfall tax on banks was not only immoral but also an attempt to unjustifiably destroy the positive financial performance of banks, operating under the harsh reality of Tinubu’s administration.

“To a large extent, this will cause a reduction in the bank’s shareholders’ fund. As shareholders of the banks, we outrightly condemn this unholy move and ask that such thought and move be perished,” he said.

Ajudua recalled that the FX gains arose as a result of a differential in currency revaluation occasioned by the devaluation of the naira.

“This doesn’t involve the movement of cash that makes CBN issue circulars requesting all banks not to pay dividends from such gain. Therefore why will the government attempt to impose tax on it? It is unfair and immoral.

“Any attempt to continue with your move will be restricted by shareholders of the bank via legal means,” he added.

Also, the national chairman of PSAN, Boniface Okezie, faulted the federal government’s decision, saying it was wrong to embark on such a move.

He queried, “Why on earth will the government rely on the private entity to make all the money they are hoping to make from N6.2 trillion from a windfall of forex exchange deal, which almighty CBN has given them?

“It is ill-human to contemplate doing such a thing. Don’t forget that the banks are private companies that are paying heavy taxes to the government from the profits they make and you want to levy them again on forex transactions.”

According to Okezie, it is the government’s parastatals the federal government must go to and find means to finance its deficit budgets and leave the banks out of its “clueless policy.”

He said the move implies the governments have failed and were short of ideas to run the affairs of governance, stressing that the administration could drop their ego and throw in the towel.

“We plan to challenge the obnoxious policies of this government that bring forth the idea. It won’t work. The problem I have is that many shareholders associations are not doing much to cue into the fights,” Okezie said.

He believes that if shareholders do not fight this course, they might not be able to get any returns from the banks anymore.

He further queried, “Why struggle now to take up your rights issues or buy their public offers when at the end it is the so-called governments and Asset Management Corporation of Nigeria (AMCON) Plc that will catch away the large chunk of the profits going to be declared by the banks. What is to be left to pay the seed provider? Nothing!

“This is the time for the judiciary to rise to the occasion to save the masses and not toe the line of government as it is still the hope of the common man,” he said.