Tony Elumelu Supports New Windfall Tax for Nigerian Banks

Tony Elumelu, the chairman of the United Bank of Africa (UBA), recently expressed his endorsement for the Nigerian government’s windfall tax on the foreign exchange gains of banks. This statement came during a meeting with President Bola Tinubu at the State House in Abuja.

The windfall tax, which is designed to tax companies that have experienced significant financial success due to favorable market conditions, has been a hot topic. On July 17, Tinubu proposed this one-time tax to the national assembly, aiming to implement it as part of the 2023 Finance Act.

However, the national assembly has now increased the rate of this windfall tax on banks’ FX gains to 70 percent in the revised Finance Act of 2024, which has raised eyebrows and sparked discussions within the financial community.

During their meeting, Elumelu emphasized the importance of this taxation as a means to help alleviate poverty in Nigeria. He remarked that where extraordinary profit is made, it should be redirected to assist those in need.

Elumelu also stressed the need for prosperity to be accessible to all Nigerians, saying that it is essential for businesses to thrive while jobs are created. He believes that mutual prosperity is the key to a happier society.

“We believe in prosperity. We believe in creating jobs and employment for our people. We believe in making sure that we democratize prosperity and that Nigerians have access to good life,” Elumelu stated.

Interestingly, Femi Otedola, another prominent figure in the banking industry and chairman of First Bank of Nigeria, also backed the government’s windfall tax, citing that it contributes to fair wealth distribution.

At the meeting, Elumelu was joined by Dr. Zacch Adedeji from the Federal Inland Revenue Service (FIRS) and Minister of Finance, Wale Edun, to discuss insights on the windfall tax and its implications for the banking sector.

According to Edun, the government aims to simplify the tax system, focusing on taxing profits while allowing businesses to grow their capital. He noted that President Tinubu, with his background in accounting and finance, played a significant role in these discussions.