Windfall tax takes centerstage as seven Banks incur N819.95 billion in earnings tax expense in 2024
In 2024, seven Nigerian banks; FCMB, Constancy, GTCO, Stanbic IBTC, UBA, Wema {Bank}, and Zenith {Bank} incurred a mixed earnings tax expense of N819.95 billion, representing a 94.96% enhance from the N413.73 billion reported in 2022.
A good portion of this spike, amounting to N223.27 billion or 27.23% of the overall, is attributable to windfall taxes arising from the newly enacted Windfall Tax Legislation.
This rise in tax liabilities mirrors the strong development in pre-tax income, which surged by 64.87% year-on-year to N4.30 trillion, up from N2.61 trillion in 2023.
Put up-tax income additionally climbed 58.68%, reaching N3.48 trillion.
On the time of submitting this report, Entry {Bank}, FirstBank Holdings, and Sterling {Bank} had but to launch their audited 2024 outcomes.
In July 2024, the Nigerian authorities enacted the Windfall Tax Invoice; an modification to Part 29A of the Finance Act, 2023, introducing a windfall levy on {financial} establishments for the primary time in Nigeria’s tax system.
The modification imposes a retrospective 70% levy for the 2023, 2024, {financial} years on overseas alternate beneficial properties derived from {financial} devices, following the foreign money floatation coverage launched by the Central {Bank} of Nigeria (CBN).
Under is a evaluation of the earnings tax bills, and windfall tax liabilities recorded by these banks:
- Wema {Bank} – N16.24 billion earnings tax expense
Wema {Bank} reported an earnings tax expense of N16.24 billion in 2024, representing a 148% year-on-year enhance in comparison with the earlier yr.
This was payable from a pre-tax revenue of N102.52 billion; the bottom among the many banks below evaluation.
Of the overall tax legal responsibility, N2.62 billion was attributed to windfall tax, accounting for 16.12% of the {bank}’s whole earnings tax expense.
- UBA – N37.16 billion earnings tax expense
United {Bank} for Africa (UBA) incurred an earnings tax expense of N37.16 billion in 2024 after changes.
- This represents a 75.23% lower in comparison with the earlier yr. This was derived from a pre-tax revenue of N803.73 billion, a 6.08% year-on-year development.
- UBA paid a windfall tax of N57.91 billion, pushed largely by overseas foreign money revaluation beneficial properties.
The {bank} reported N292.09 billion in overseas foreign money revaluation beneficial properties in 2024, in comparison with N26.58 billion within the prior yr, in response to the notes in its 2024 audited {financial} statements. Offering additional perception, the notes disclosed:
“Following a sequence of engagements, provision of knowledge, and reconciliation conferences with the FIRS, a provisional Windfall Levy of N57.912 billion was estimated to be payable by the {Bank} for the 2023 and 2024 {financial} years, damaged down as follows:
FY2023: N24.819 billion
FY2024: N33.092 billion.
- FCMB – N38.56 billion earnings tax expense
First Metropolis Monument {Bank} (FCMB) reported an earnings tax expense of N38.56 billion in 2024, which amounted to 34.4% of its pre-tax revenue of N111.90 billion, reflecting a 7.15% year-on-year development.
- The earnings tax expense consists of N17.60 billion in windfall tax, alongside present and deferred tax prices.
- In keeping with the notes to the {financial} statements, the {bank}’s overseas alternate beneficial properties declined sharply by 56.56%, to N36.47 billion in 2024.
These had been primarily unrealised revaluation beneficial properties from overseas currency-denominated property and liabilities as of 31 December 2024.
- STANBIC IBTC – N78.485 billion earnings tax expense
Stanbic IBTC reported an earnings tax expense of N78.49 billion in 2024, marking a big 143% year-on-year enhance.
- This was incurred from a pre-tax revenue of N303.80 billion.
- The tax expense features a windfall tax of N17.18 billion, representing 21.89% of the overall earnings tax legal responsibility.
It additionally includes N46.35 billion in present tax and N14.96 billion in deferred tax expense.
- FIDELITY – N107.108 billion earnings tax expense
Constancy {Bank} reported a pre-tax revenue of N385.22 billion in 2024, representing a considerable 210.01% year-on-year development. From this, the {bank} incurred an earnings tax expense of N107.11 billion.
The tax burden features a windfall tax of N13.33 billion, accounting for 12.46% of the overall earnings tax expense in 2024.
In keeping with the notes to the {financial} statements, N5.71 billion of the N13.33 billion windfall tax pertains to overseas alternate beneficial properties realized within the 2023 {financial} yr.
- GTCO – N248.44 billion earnings tax expense
GTCO incurred an earnings tax expense of N248.44 billion in 2024, which features a windfall tax provision of N51.25 billion, comprising N23.7 billion for the yr 2023.
This tax expense was incurred from a pre-tax revenue of N1.27 trillion in 2024, pushed by sturdy efficiency in web curiosity earnings and non-interest earnings.
The 2024 tax expense represents a 257% year-on-year enhance, in comparison with N69.66 billion in 2023, with the windfall tax contributing 20.63% to the overall earnings tax expense.
- Zenith {Bank} – N293.956 billion earnings tax
Zenith {Bank} incurred a complete earnings tax expense of N293.96 billion in 2024, which incorporates N344.39 billion for the present yr, together with a deferred tax credit score of N50.43 billion.
- This was derived from a pre-tax revenue of N1.33 trillion, leading to a post-tax revenue of N1.03 trillion.
- The {bank} paid a windfall tax of N63.31 billion, the best among the many banks below evaluation, which represents 21.54% of its whole earnings tax expense.
- In keeping with the notes within the 2024 {financial} statements, Zenith {Bank} recorded a overseas foreign money revaluation lack of N178.02 billion, in comparison with a acquire of N228.98 billion in 2023, stemming from the revaluation of overseas currency-denominated property and liabilities.
General, whereas the tax has bolstered authorities income following the foreign money floatation coverage, the stark distinction between windfall tax funds and the negligible N174 million Nigeria Police Belief Fund Levy paid by these banks raises considerations over coverage alignment with nationwide priorities, particularly safety funding.
