Economy
NSE, KPMG Outline Application of Finance Act to Capital Market
By Adedapo Adesanya
The Nigerian Stock Exchange (NSE) in collaboration with top tax advisory agency, KPMG Nigeria, held a symposium on the amendments contained in the Finance Act 2020 on Monday, February 3.
The workshop was organised to understand the implications of the newly signed law on activities in the Nigerian financial markets with focus on the capital market.
The Finance Act is regarded as a significant milestone for Nigeria as it marks a return to active fiscal supervision motivating regular review of the macro environment and stimulation of the economy on an annual or at least regular basis by means of such instruments as a Finance Act.
The Act introduces changes to the Companies Income Tax Act, Value Added Tax Act, Petroleum Profits Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Customs and Excise Tariff (Consolidation) Act and Stamp Duties Act.
One of the many perks of the act, as amended, was the introduction of tax incentives for investment in infrastructure and capital markets; support small businesses in line with the ease of doing business reforms and raise revenue for government, by various fiscal measures, including increase in the VAT rate from 5 percent to 7.5 percent, which took effect on Saturday, February 1, 2020.
Speaking at the event, the Chief Executive Officer (CEO) of the exchange, Mr Oscar Onyema, said that the signing of the Finance Bill into law was a landmark achievement for the Nigerian capital market.
According to him, this includes creating tax incentives for public companies and capital market investors; removal of double taxation in Collective Investment Schemes (CIS) and Real Estate Investment Trusts (REITs); as well as manufactured dividend in securities lending among others.
“Since 2014, the exchange alongside Securities and Exchange Commission (SEC) as well as other capital market stakeholders have been at the forefront of advocacy with policy makers and tax authorities for favourable tax structures for primary and secondary markets activities in the Nigerian capital market.
“The NSE, in its efforts to support the growth of the Nigerian economy and its issuers is, therefore, happy to collaborate with leading tax expert, KPMG to highlight the implications of these new rules and provide guidance on how to effectively navigate the provisions of the bill, especially as it relates to taxes,” he said.
On his part, the Partner & Head, Tax, Regulatory and People Services, KPMG, Mr Wole Obayomi, said the act was a landmark legislation that should be embraced by all stakeholders to ensure it achieves its laudable objectives.
“The removal of multiple tax footprints for securities lending and real estate investment schemes is expected to stimulate activities in those segments of the market.
“The generous incentives for the small and medium enterprises (SMEs) in the Finance Act coupled with the launching of the Growth Board for capital raising by that sector from the Nigerian Stock Exchange, are timely interventions to drive the growth of the economy through the SMEs.
“Overall, the Finance Act 2019 is a welcome development,” he declared.
During a presentation on the Implementation for Nigerian Corporates, Financial Market and The Economy, the Senior Manager, Tax, Regulatory and People Services, Mr Ikechukwu Ene, noted key areas that the changes in the Finance Act affect the capital market: Securities Lending, Real-Estate Investment, Excess Dividend Tax Rule, Unit Trust and Business Organizations.
In terms of securities lending, he said that the recent amendment to the tax laws by the Finance Act 2019 was in line with global best practices in securities lending activities, which he said will boost market liquidity, following the elimination of tax on manufactured dividend arising from securities loan transaction.
Speaking on the Excess Dividend Tax (EDT) Rule contained in the Finance Act, Mr Ene clarified that the amendment will help to mitigate incidence of double tax by excluding certain profits from the EDT.
According to him, these include; franked investment income – an income in the form of dividends paid to a company from earnings on which corporation tax has already been paid by the originating company; after-tax profits; and tax-exempt income among others.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange jumped 1.04 per cent on Wednesday, June 17, with the market capitalisation adding N26.99 billion to settle at N2.619 trillion compared with the previous session’s N2.592 trillion, and the Unlisted Security Index (NSI) rising by 45.1 points to close at 4,378.45 points, in contrast to the preceding day’s 4,333.35 points.
The rally was driven by the gains reported by two securities, which outweighed the losses posted by three securities, led by FrieslandCampina Wamco Nigeria Plc, which dipped by N1.95 to N178.19 per unit from N180.14 per unit. Geo-Fluids Plc lost 19 Kobo to close at N2.61 per share compared with Tuesday’s closing price of N2.80 per share, and Food Concepts Plc slid by 1 Kobo to N1.77 per unit from N1.78 per unit.
On the flip side, Central Securities Clearing System (CSCS) Plc recorded a N6.33 appreciation to trade at N86.57 per share versus the previous day’s N80.24 per share, and Light House Financial Services Plc grew by 10 Kobo to N1.13 per unit from the N1.03 per unit it closed a day earlier.
In the midweek session, the value of stocks traded by investors surged by 181.0 per cent to N128.3 million from the preceding session’s N45.6 million, the volume of securities increased by 305.6 per cent to 2.8 million units from Tuesday’s 688,290 units, and the number of deals executed jumped by 6.5 per cent to 33 deals from 31 deals.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most active stock on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 67.3 million units exchanged for N4.6 billion.
GNI Plc also ended as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units sold for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Dipo Olowookere
As part of moves to boost its internally generated revenue (IGR) and increase its streams of income, Ayobo-Ipaja Local Council Development Area (LCDA) is considering commercial ostrich and crocodile farming.
The council recently held a sensitisation programme, where agribusiness experts engaged stakeholders, including residents and entrepreneurs, on the viability of this.
The programme provided participants with the knowledge on investment requirements, training opportunities, startup funding, and regulatory frameworks guiding ostrich and crocodile farming in Nigeria.
The chairman of Ayobo-Ipaja LCDA, Mr Lukmon Agbaje, commended the initiative, reiterating his administration’s commitment to promoting innovative agricultural practices as a pathway to sustainable development.
He described agriculture as a critical driver of economic transformation, stressing that modern farming has evolved into a profitable business venture with immense potential for youth empowerment and enterprise development.
Mr Agbaje further assured participants of the council’s readiness to partner with investors, agricultural institutions, and other relevant stakeholders to facilitate training, capacity building, and access to opportunities across the agricultural value chain.
On his part, the council’s Head of Department of Agriculture, Mr Wale Atepe, emphasised the growing market demand for products such as leather, meat, feathers, and other valuable by-products, adding that strategic investment in the sector could unlock significant opportunities for employment, wealth creation, and export earnings.
By Adedapo Adesanya
The Naira depreciated against the United States Dollar by 0.21 per cent or N2.89 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, June 17, to N1,360.07/$1 from Tuesday’s closing rate of N1,357.18/$1.
In the same vein, the Nigerian Naira weakened against the Pound Sterling in the official market during the session by N4.42 to trade at N1,824.81/£1 versus the preceding session’s N1,820.39/£1, and lost N4.19 on the Euro to sell at N1,577.96/€1 compared with the previous day’s N1,573.79/€1.
However, at the GTBank segment, the local currency gained N1 against the greenback yesterday to exchange at N1,372/$1 versus N1,373/$1, and at the parallel market, it remained unchanged at N1,385/$1 at midweek.
The Naira’s performance comes amid tight inflows from exporters, non-bank corporates, and foreign investors, evidenced by the slow movement of the country’s gross external reserves level of $50.505 billion, despite muted inflows from oil sales after a recent drop in prices.
There have been reduced FX market interventions by the Central Bank of Nigeria (CBN) as it maintains its stance to keep the local unit stable enough to retain foreign investments.
The Nigerian government also dismissed a report suggesting that it was considering new taxes on telecommunications services and petroleum products, which would have spooked investors.
The federal government said that the reports misrepresented recommendations contained in the International Monetary Fund (IMF) Article IV Consultation Report on Nigeria, explaining that the recommendations were advisory and do not constitute government policy or binding obligations on Nigeria.
In the cryptocurrency market, prices were negative as traders and investors shrugged off a signed Iran peace deal that lifted stocks, after the Federal Reserve held interest rates but made clear it is more worried about inflation than growth.
Under the new Chair, Mr Kevin Warsh, the Federal Reserve left rates unchanged at 3.5 per cent to 3.75 per cent, in line with expectations, but its updated projections pointed to higher inflation and a slower pace of future rate cuts, and some officials floated the possibility that rates may still need to rise.
Cardano (ADA) slid 4.5 per cent to trade at $0.1731, Ripple (XRP) went down by 4.2 per cent to $1.16, Ethereum (ETH) shrank by 3.5 per cent to $1,727.55, Solana (SOL) lost 3.4 per cent to sell $71.05, Dogecoin (DOGE) also fell by 3.4 per cent to $0.0843, Binance Coin (BNB) slumped by 3.1 per cent to $587.53, and Bitcoin (BTC) crashed by 2.6 per cent to $63,892.28, while TRON (TRX) gained 0.7 per cent to finish at $0.3201, with the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closing flat at $1.00 each.
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