The Nigerian Senate has passed a bill seeking to impose a one-time windfall tax on banks for foreign exchange (forex) gains.

The bill was passed on Tuesday after Sani Musa, the chair of the finance committee, presented a report to the upper legislative chamber.

In his presentation, Senator Musa clarified that the windfall tax is not intended to be paid to banks’ shareholders as dividends. He further stated that any bank that withholds its tax obligations would be liable to pay an additional 10 percent on top of what they should have paid.

“The windfall tax is not to be paid by banks to their shareholders,” Musa stated.

Last week, President Bola Tinubu sent a letter to the National Assembly, requesting amendments to the Finance Act 2023 to allow the federal government to tax banks’ foreign exchange gains.

In his letter, President Tinubu explained that the proposed amendments would enable a one-time windfall tax on the forex gains realized by banks in their 2023 financial statements.

The president made reference to the importance of the windfall tax in funding critical areas such as capital infrastructure development, education, healthcare, and welfare initiatives.

The implementation of the tax is expected to provide a substantial boost to the government’s financial resources, aiding in the country’s overall development.