Nigerian Banks Face Steep Tax Hike in 2023 Due to Soaring Profits
In 2023, eleven major Nigerian banks collectively incurred a total tax burden of N575.168 billion, marking a dramatic 175% increase from the N209.608 billion reported in 2022. Of this total, N440.305 billion was specific to the 2023 taxable year. This sharp rise in tax expenses is primarily due to substantial increases in pre-tax profits recorded by these banks.
The banks in question are Access Holdings, FBNH, FCMB, Fidelity, GTCO, Jaiz Bank, Stanbic IBTC, Sterling Bank, UBA, Wema Bank, and Zenith Bank. Together, they achieved N3.722 trillion in pre-tax profits, reflecting a remarkable 197% increase from the N1.255 trillion reported in 2022. This surge was driven by significant growth in net interest income, non-interest income, and foreign exchange revaluation gains.
The Nigerian government’s recent proposal to implement a 50% tax on profits from foreign exchange revaluation in 2023 is expected to further increase these banks’ tax burdens. This new policy, aimed at funding an increase in workers’ minimum wage, could impact their profitability and capital adequacy, especially if the banks had planned to use these gains as a buffer against currency fluctuations, as directed by the Central Bank of Nigeria.
In 2023, these banks reported a combined post-tax profit of N3.156 trillion, a substantial 201% increase from the N1.048 trillion recorded in 2022.
Source: Nairametrics
