Naira weakens as banks suspend BDCs’ accounts on FIRS ‘directive’

• ABCON kicks, says FIRS’ policy demanding BDCs pay taxes unacceptable

By Ruth Olurounbi

Nigerian currency on Thursday weakened against the dollar following commercial banks’ suspension of the accounts of the foreign exchange suppliers, the Bureau De Change (BDC), on the order of the Federal Inland Revenue Service (FIRS), over the BCS’ failure

to remit taxes on their turnover volumes.

The naira lost 30 kobo to exchange at N358.30 to the dollar at the parallel market in Lagos, weaker than N358 traded on Wednesday, according to currency dealers who spoke to PSN on phone from Abuja. The naira traded at N360 to the dollar at the BDC window, while the Pound Sterling and the Euro closed at N475 and N418, respectively, the currency traders said.

While the naira closed at the interbank market at N307.10, N396.16 and N353.53 against the dollar, Pounds and Euro, respectively, the trading at the investor’s window saw the local currency close at N362.60, with a turnover of 167.78 million dollars, while the naira exchanged at N306.10 to the dollar at the CBN official window.

Several commercial banks in Nigeria were said to have closed BDCs accounts and were said to have written letters to inform the operators of the actions. A letter from one of the commercial banks read in part that “… we are compelled by law to place ‘Post No Debit’ on your account pending the receipt of further instructions from the Executive Chairman of FIRS. This is for your information and necessary action as you are best advised to contact the FIRS officials.”

But the Association of Bureaux De Change Operators of Nigeria (ABCON) says it is unacceptable for the FIRS to demand that the operators pay taxes on their turnover, and therefore will be writing the Central Bank of Nigeria to stop the order by the FIRS.

ABCON’s president, Aminu Gwadabe, says the foreign exchange suppliers’ “funding cash for dollar collections cannot be subjected to taxes,” primarily because “Value Added Tax exempt for BDCs is applicable in other climes and should also be practiced in Nigeria.”

According to him, “an average BDC does over N30 million weekly turnover and paying taxes on such funds will affect their cash flow and ability to meet their statutory role of foreign exchange supply to the retail-end of the market,” thus, the body “will be writing to the Central Bank of Nigeria to complain about the illegal policy of the ‘Post No Debit’”.