Windfall tax takes centerstage as seven Banks incur N819.95 billion in income tax expense in 2024 

A significant portion of this spike, amounting to N223.27 billion or 27.23% of the total, is attributable to windfall taxes arising from the newly enacted Windfall Tax Law.

This rise in tax liabilities mirrors the robust growth in pre-tax profits, which surged by 64.87% year-on-year to N4.30 trillion, up from N2.61 trillion in 2023.

Post-tax profits also climbed 58.68%, reaching N3.48 trillion.

At the time of filing this report, Access Bank, FirstBank Holdings, and Sterling Bank had yet to release their audited 2024 results.

In July 2024, the Nigerian government enacted the Windfall Tax Bill; an amendment to Section 29A of the Finance Act, 2023, introducing a windfall levy on financial institutions for the first time in Nigeria’s tax system.

The amendment imposes a retrospective 70% levy for the 2023, 2024, financial years on foreign exchange gains derived from financial instruments, following the currency floatation policy introduced by the Central Bank of Nigeria (CBN).

Below is a review of the income tax expenses, and windfall tax liabilities recorded by these banks:

Wema Bank reported an income tax expense of N16.24 billion in 2024, representing a 148% year-on-year increase compared to the previous year.

This was payable from a pre-tax profit of N102.52 billion; the lowest among the banks under review.

Of the total tax liability, N2.62 billion was attributed to windfall tax, accounting for 16.12% of the bank’s total income tax expense.

United Bank for Africa (UBA) incurred an income tax expense of N37.16 billion in 2024 after adjustments.

The bank reported N292.09 billion in foreign currency revaluation gains in 2024, compared to N26.58 billion in the prior year, according to the notes in its 2024 audited financial statements. Providing further insight, the notes disclosed:

“Following a series of engagements, provision of information, and reconciliation meetings 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, broken down as follows: 
FY2023: N24.819 billion 
FY2024: N33.092 billion. 

First City Monument Bank (FCMB) reported an income tax expense of N38.56 billion in 2024, which amounted to 34.4% of its pre-tax profit of N111.90 billion, reflecting a 7.15% year-on-year growth.

These were primarily unrealised revaluation gains from foreign currency-denominated assets and liabilities as of 31 December 2024.

These were primarily unrealised revaluation gains from foreign currency-denominated assets and liabilities as of 31 December 2024.

Stanbic IBTC reported an income tax expense of N78.49 billion in 2024, marking a significant 143% year-on-year increase.

It also comprises N46.35 billion in current tax and N14.96 billion in deferred tax expense.

Fidelity Bank reported a pre-tax profit of N385.22 billion in 2024, representing a substantial 210.01% year-on-year growth. From this, the bank incurred an income tax expense of N107.11 billion.

The tax burden includes a windfall tax of N13.33 billion, accounting for 12.46% of the total income tax expense in 2024.

According to the notes to the financial statements, N5.71 billion of the N13.33 billion windfall tax relates to foreign exchange gains realized in the 2023 financial year.

GTCO incurred an income tax expense of N248.44 billion in 2024, which includes a windfall tax provision of N51.25 billion, comprising N23.7 billion for the year 2023.

This tax expense was incurred from a pre-tax profit of N1.27 trillion in 2024, driven by strong performance in net interest income and non-interest income.

The 2024 tax expense represents a 257% year-on-year increase, compared to N69.66 billion in 2023, with the windfall tax contributing 20.63% to the total income tax expense.

Zenith Bank incurred a total income tax expense of N293.96 billion in 2024, which includes N344.39 billion for the current year, along with a deferred tax credit of N50.43 billion.

Overall, while the tax has bolstered government revenue following the currency floatation policy, the stark contrast between windfall tax payments and the negligible N174 million Nigeria Police Trust Fund Levy paid by these banks raises concerns over policy alignment with national priorities, especially security funding.