Zenith Bank, Guaranty Trust Holding Company (GTCO), and United Bank for Africa (UBA) have collectively incurred a windfall tax liability of N172.3 billion, following the implementation of the amended Finance Act.
A windfall tax is an additional levy imposed by the government on businesses that have gained from favorable market conditions.
The Finance Act (Effective Date Variation) Order, 2023, signed by President Bola Tinubu, initially proposed a 50 percent windfall tax on banks’ foreign exchange (FX) gains.
However, the National Assembly later increased it to 70 percent, with the amended Act taking effect on July 23, 2023.
According to the financial reports for 2024, GTCO, Zenith Bank, and UBA reported windfall tax payments of N51.2 billion, N63.3 billion, and N57.9 billion, respectively.
The tax applies to FX gains realized by banks between 2023 and 2025.
GTCO disclosed that it incurred N51.1 billion in windfall tax, with N23.7 billion accounted for in 2023.
The bank stated that the Federal Inland Revenue Service (FIRS) assessed its liability and advised a total provision of N51 billion.
Similarly, UBA recorded a tax liability of N57.9 billion, with N24.8 billion attributed to 2023 and N33.1 billion to 2024.
The bank attributed the tax burden to the devaluation of the naira, which led to significant FX gains for banks holding foreign assets.
The amended Finance Act mandates that banks remit 70 percent of their realized FX profits to the federal government within the stipulated financial years.
UBA confirmed that it had engaged in reconciliation meetings with the FIRS before the tax figures were finalized.
The implementation of the windfall tax is expected to impact banks’ profitability and liquidity in the coming years, as financial institutions adjust to the new tax regime.
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