Economy

Windfall tax: FG insists on sanctions for defaulting bank chiefs

Published

10 months ago

July 23, 2024

Admin

The Federal Government has reiterated that the principal officers of banks who refuse to comply with the law on the windfall tax on banks’ foreign exchange profits will be sanctioned.

The government’s position was reiterated on Monday at the National Assembly when the Minister of Finance, Wale Edun, and the Chairman of the Federal Inland Revenue Service, Zack Adediji, met with the finance committees of both chambers on the Amendment of the Finance Bill, 2024.

Last week Wednesday, the Senate gave expeditious passage to President Bola Tinubu’s request to amend the Finance Act to impose a one-time windfall tax on banks’ foreign exchange profits in 2023.

A windfall tax is a higher tax levied by the government on sectors or businesses that have disproportionately benefited from favourable market conditions.

The President said the money would be part of the revenue used to fund the additional N6.2tn added to the 2024 budget.

The bill which has passed the second reading states, “The Federal Inland Revenue shall assess the realised profits, collect, account, and enforce payment of levy payable under section 30 in accordance with the powers of the Service under the Federal Inland Revenue Service (Establishment) Act 2007; and in the exercise of its functions in 32(a) above, may enter into a deferred payment agreement with the assessed banks, provided that such deferred payment agreement is executed on or before December 31, 2024.

“Any bank that fails to pay the windfall profit levy to the service and has not executed a deferred payment agreement before December 31, 2024, commits an offence and shall, upon conviction, be liable to pay the windfall profit levy withheld or not remitted in addition to a penalty of 10 per cent of the levy withheld or not remitted per annum and interest at the prevailing Central Bank of Nigeria minimum rediscount rate and imprisonment of its principal officers for a period of not more than three years.

“Financial year means either the year commencing from January 1, 2023 to December 31, 2023, or any period within the financial year not aligned with the calendar year comprising twelve calendar months of the bank’s financial activity,” it added.

Speaking at the meeting, Edun said, the “bank windfall” profit levy, though small still constituted an important contribution to government finances at a time when revenues had substantially increased despite minimising taxes.

In his explanation, the FIRS chairman explained that the windfall tax was not a new tax imposed on banks.

Adedeji said, “These are the gains that you have without any contribution from you, without any value addition. They result from the effect of an adverse activity on others. And who are these others? If you look at the report of all manufacturing entities in the last one and a half years, you will discover that a lot of registered companies recorded huge losses from exchange transactions.

“Anywhere in the world, your duty as the government is to redistribute the wealth to sustain the progress and prosperity of the nation.

“So the loss suffered by manufacturing, as a result of these foreign gains, which is being recorded in the bank is what the government seeks to redistribute. And that is why we have this levy.

“So we seek your permission and your understanding in balancing this economic inequality that has occasioned due to the circumstances that we find ourselves.”

Speaking on the sharing formula, the FIRS chairman proposed that it be distributed 50/50 between banks and the government.

He said, “These gains that are realised, the levy proposal today is 50 (per cent) for the bank and 50 (per cent) for the government.”

Raising the issue of penalty as stated in the bill, Senator Isah Jibrin ( APC, Kogi East), asked that the bill be more explicit.

He said, “My area of worry is concerning the penalty, we need to be very explicit on it.

“On the issue of penalty, here it is stated, 10 per cent of the tax withheld or not remitted per annum and interest at the prevailing Central Bank of Nigeria MRR. So what are we going to do? 10 per cent is like coming from nowhere, so I would suggest that we align the MRR.”

“Then at what point does the issue of imprisonment of the officials come in? At what point do we now say, okay, enough is enough and the officials should be arrested after default, is it after a month, a year, two years, or three years.”

Responding to this, Edun said it was unlikely that banks would defy the government, but noted there were penalties for those who defaulted.

The finance minister said, “To be fair to the banks there is no reason to assume that’s what they trying to do. Let us give the benefit of the doubt to one another.

“Well there has to be, there has to be something that will serve as a deterrent. The penalties have to be there. And at the end of the day, tax evasion is a criminal offence.

“For underreporting of profits by the bank, we have enough technical ability to look at what the bank’s audited accounts say and track the level of foreign exchange and the profits therefrom.”

Adedeji also allayed fears regarding possible cases of underreporting.

He noted that the CBN in a memo in September 2023 and March this year had directed commercial banks in the country not to touch or spend the profits they made from foreign exchange transactions.

Economy

SEE Current Black Market Dollar (USD) To Naira (NGN) Exchange Rate — May 19, 2025

Published

12 hours ago

May 19, 2025

ADMIN

Current Black Market Dollar (USD) To Naira (NGN) Exchange Rate
Lagos‑area currency traders (the “Aboki” market) quoted the U.S. dollar at ₦1,625 to buy and ₦1,635 to sell on Sunday, 18 May 2025, according to Bureau‑de‑Change sources.

Note: The Central Bank of Nigeria (CBN) does not endorse or monitor the parallel market. Anyone with legitimate foreign‑exchange needs is expected to use their commercial bank.

Snapshot of Today’s Rates
Market Buy (₦) Sell (₦)
Black market 1,625 1,635
CBN official window* 1,597 (low) – 1,603 (high)
*The CBN window reflects rates seen on licensed platforms such as the Investors’ & Exporters’ (I&E) window. Figures move throughout the trading day.

Demand‑supply mismatch – Businesses and individuals often need dollars faster than banks can provide them, pushing traffic to roadside dealers.
Import‐driven economy – Nigeria relies heavily on imported goods, so importers hunt for dollars even when official allocations tighten.
Speculation and hoarding – When the naira weakens, some traders hold dollars hoping to sell at higher rates, amplifying scarcity.
Policy expectations – Announcements or rumours about CBN interventions, interest‑rate moves, or oil‑revenue swings can trigger abrupt swings in the parallel market.
Travel & tuition: Budget extra naira if you must source dollars outside the banking system.
Remittances: Friends or family sending money home may obtain better value using official remittance channels, where rates track the I&E window.
Businesses: Lock in forward contracts or explore CBN FX auctions if your cash‑flow exposure is large.
Investors: A widening spread between official and parallel rates often signals pressure on foreign‑exchange reserves and can influence equity and bond pricing.

Staying Updated
Black‑market prices change quickly—sometimes several times a day. Check:

Authorised dealer bulletins for official rates.
Credible financial‑news platforms for midday parallel‑market snapshots.
CBN press releases for policy moves that may narrow or widen the gap.
Rates quoted here serve as a guide only; the price you ultimately pay or receive may differ based on volume, timing, and location.

Economy

SEE Current Black Market Dollar (USD) To Naira (NGN) Exchange Rate Today

Published

2 days ago

May 17, 2025

ADMIN

Dollar‑to‑Naira Exchange Rates (Friday, 16 May 2025)
Black‑Market (Lagos “Aboki”) Rates
According to several Bureau De Change (BDC) operators surveyed in Lagos:

Rate (₦)
Buying 1 USD = ₦1,622
Selling 1 USD = ₦1,635
These quotations reflect cash transactions on the informal, over‑the‑counter market and can shift by the hour as dealers respond to supply‑and‑demand pressures.

Official CBN Window
The Central Bank of Nigeria (CBN) publishes a daily reference band for authorised dealers:

Rate (₦)
Highest ₦1,603
Lowest ₦1,597
The CBN discourages the use of street trading for foreign exchange and advises individuals or businesses to route transactions through their banks.

Why the Two Markets Differ
Liquidity Constraints: Limited US‑dollar supply in formal channels nudges importers and travellers toward the black market, where premiums emerge.
Speculative Demand: Expectations of further naira weakening often push up “Aboki” prices ahead of official adjustments.
Policy Announcements: Any hint of tighter import controls or changes to fuel‑subsidiary rules sparks fresh demand for dollars as a hedge.
Remittances & Diaspora Flows: Seasonal spikes such as during summer holidays can momentarily ease black‑market rates if inflows rise.
Practical Tips for Forex Users
Compare Quotes in Real Time: Rates posted online may already be outdated; confirm with multiple dealers or your bank before transacting.
Watch CBN Circulars: The apex bank occasionally intervenes with special FX auctions that can narrow the gap between official and parallel markets.
Plan Large Payments Early: School fees or medical bills abroad can often be processed at the investors’ & exporters’ (I&E) window, which sits between official and street rates—but paperwork takes time.
Stay Within the Law: Carrying large sums of foreign currency without declaring it at ports of entry or exit violates CBN and customs regulations.

Containing 742 Million Dollars In Bitcoin Is Forced To Give Up
Outlook
Analysts expect continued volatility in the short term. Monetary‑policy tightening has slowed but not reversed naira depreciation. If crude‑oil receipts improve or fresh external financing arrives, the pressure on parallel‑market premiums could ease. Conversely, any shortfall in export earnings is likely to keep black‑market quotes well above the CBN band.

Economy

SEE Current Black Market Dollar (USD) To Naira (NGN) Exchange Rate

Published

4 days ago

May 16, 2025

ADMIN

Current Black Market Dollar (USD) To Naira (NGN) Exchange Rate
As of Thursday, May 15, 2025, the exchange rate of the United States Dollar (USD) to the Nigerian Naira (NGN) in the Lagos parallel market, commonly referred to as the black market, stands as follows:

Buying Rate: ₦1,625 per $1
Selling Rate: ₦1,630 per $1
These rates were sourced from key operators within the Bureau De Change (BDC) segment of the market and may fluctuate depending on demand, location, and volume of the transaction.

Important Disclaimer from the Central Bank of Nigeria (CBN)
The Central Bank of Nigeria has repeatedly cautioned against the use of the parallel market for foreign exchange transactions. The apex bank maintains that the official forex market is the only recognized channel for buying and selling foreign currency. Individuals or businesses in need of foreign exchange are strongly advised to approach their respective commercial banks or authorized dealers.

Official CBN Exchange Rate – May 15, 2025
In contrast to the rates observed in the black market, the official rates published by the CBN on the same date are:

Highest Rate: ₦1,604 per $1
Lowest Rate: ₦1,597 per $1
These rates reflect the regulated interbank market and may differ from bank-to-bank or based on transaction purposes such as international payments, imports, and remittances.

It’s important to note that the foreign exchange rates quoted here are indicative and may not reflect the exact rates offered to individuals or businesses at any given moment. Factors such as the location of exchange, prevailing market conditions, transaction volume, and negotiations between parties can lead to slight variations.

Final Thoughts
As the Naira continues to fluctuate against the Dollar, both in the official and unofficial markets, it is crucial for individuals and businesses to monitor exchange rate trends closely. For the most accurate and up-to-date rates, always consult authorized BDC operators or your local bank.