Economy

Investors Lament Resumption of 5% VAT on NSE Transactions

Published

5 years ago

16/07/2019

By Dipo Olowookere

Some investors in the Nigerian Stock market have expressed dissatisfaction with the resumption of 5 percent Value Added Tax (VAT) commission to be charged on all transactions executed at the exchange from Wednesday, July 24, 2019.

Business Post recalls that on July 25, 2014, the federal government, through the then Minister of Finance and Coordinating Minister of the Economy, Mrs Ngozi Okonjo-Iweala, commenced the exemption of VAT payment on all NSE transactions. This exemption had a lifespan of five years, which lapses on July 24, 2019.

Already, some stockbrokers have been sending notifications to their clients, informing them that from next week, they will begin to pay extra amount of money for transactions carried out on their behalf.

“Please be notified that Value Added Tax (VAT) on commissions will now be charged on transactions conducted on the Nigerian Stock Exchange (NSE).

“The order for exemption of VAT from all NSE transactions was granted by the Coordinating Minister of the Economy and the Honourable Minister of Finance in 2014. The order became effective on the 25th July 2014 for a 5 -year period, which expires on the 24th July, 2019.

“In this regard, all dealing members of the Nigerian Stock Exchange have been notified to resume charging of VAT on all NSE transactions effective 25th July 2019.

“Subsequently, a 5% VAT on brokerage commission earned, NSE fees and CSCS fees will be restored effective 25th July 2019.

“Thank you for your valued patronage,” a notice sent to investors by one of the stockbrokers in Lagos and obtained by Business Post said.

The NSE had in a circular dated July 10, 2019 and titled NSE/RD/BDR/CIR5/19/07/10 informed stockbrokers of the resumption of the VAT payment.

“Please refer to our circular with reference BDR/CIR/GOI/10/14 dated 27 October 2014 on the above subject matter (attached as Appendix A); and the Value Added Tax (VAT) Exemption of Commissions on Stock Exchange Transactions Order (Order) granted by the Coordinating Minister for the Economy and Honourable Minister of Finance in 2014. (See, Official Gazette of the Federal Republic of Nigeria: No. 95, Vol. 101 issued on 30 July 2014).

“The Order which became effective on 25 July 2014 is valid for a period of five (5) years, and thus the exemption granted in the Order is set to expire on 24 July 2019.

“To that extent, all Dealing Members of the Nigerian Stock Exchange are to note that effective 25 July 2019, barring any further extensions from the Federal Government:

“i. VAT is to be charged on all commissions applicable to capital market transactions. These are commissions: a. earned by Dealing Members on traded values of shares; and b. payable to The Nigerian Stock Exchange (NSE) and the Central Securities Clearing System Plc. (CSCS);

“ii. The CSCS will automate the deduction of VAT charged on commissions payable to The NSE and the CSCS; and

“iii. Dealing Members are required to resume the deduction of VAT on commissions earned.

“Consequently, Dealing Members are required to engage their software vendors for the automation of VAT deductions, and communicate to their clients the above ahead of the effective date.

“Furthermore, Dealing Members are reminded to ensure that the VAT charged on the commissions earned are remitted to the Federal Inland Revenue Service (FIRS) as and when due; and that the corresponding evidence of remittance is retained for future reference,” the circular from the NSE last week had stated.

However, some investors are calling for an extension of the five percent VAT exemption, saying it would further encourage more people to consider joining the stock market at this moment.

Business Post reports that in 2014, when the federal government introduced the initiative, it was to encourage more investors into joining the capital market.

But some investors want this to continue for another five or three years.

“Government should consider extending the VAT exemption for another five or three years. The present state of the economy in Nigeria is not encouraging investment and if this exemption is not restored, I can guarantee you that more people will exit the market,” an investor at the stock market, who identified herself as Modupe Adediran, informed our correspondent.

“Since I received the notification from my stockbroker last week, I have been in a thinking mode. I cannot just imagine paying 5 percent tax on any transaction I execute in the trading of shares in my portfolio. The NSE should just fight for us by convincing the federal government to extend the exemption for another period,” another investor, who asked not to be named, told Business Post on Monday.

An official of one of the leading stockbrokers in the country, who begged for anonymity, said their hands were tied on this issue.

“There is nothing we can actually do concerning this matter because we received a circular to adhere to the directive. The best we can do to attract more investors or clients is to slightly reduce what we charge as commission. Asides that, there is nothing we can do,” the official said.

Business Post learned that the exemption can remain for another period except President Muhammadu Buhari appoints a Minister of Finance, which is likely not possible before July 24 because such person would have to be screened and confirmed by the Senate.

However, when a Finance Minister is eventually appointed by the President, the exemption can still be brought back.

Economy

FAAC Disburses 1.727trn to FG, States Local Councils in December 2024

Published

19 hours ago

14/12/2024

Modupe Gbadeyanka

By Modupe Gbadeyanka

The federal government, the 36 states of the federation and the 774 local government areas have received N1.727 trillion from the Federal Accounts Allocation Committee (FAAC) for December 2024.

The funds were disbursed to the three tiers of government from the revenue generated by the nation in November 2024.

At the December meeting of FAAC held in Abuja, it was stated that the amount distributed comprised distributable statutory revenue of N455.354 billion, distributable Value Added Tax (VAT) revenue of N585.700 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.046 billion and Exchange Difference revenue of N671.392 billion.

According to a statement signed on Friday by the Director of Press and Public Relations for FAAC, Mr Bawa Mokwa, the money generated last month was about N3.143 trillion, with N103.307 billion used for cost of collection and N1.312 trillion for transfers, interventions and refunds.

It was disclosed that gross statutory revenue of N1.827 trillion was received compared with the N1.336 trillion recorded a month earlier.

The statement said gross revenue of N628.972 billion was available from VAT versus N668.291 billion in the preceding month.

The organisation stated that last month, oil and gas royalty and CET levies recorded significant increases, while excise duty, VAT, import duty, Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and EMTL decreased considerably.

As for the sharing, FAAC disclosed that from the N1.727 trillion, the central government got N581.856 billion, the states received N549.792 billion, the councils took N402.553 billion, while the benefiting states got N193.291 billion as 13 per cent derivation revenue.

From the N585.700 billion VAT earnings, the national government got N87.855 billion, the states received N292.850 billion and the local councils were given N204.995 billion.

Also, from the N455.354 billion distributable statutory revenue, the federal government was given N175.690 billion, the states got N89.113 billion, the local governments had N68.702 billion, and the benefiting states received N121.849 billion as 13 per cent derivation revenue.

In addition, from the N15.046 billion EMTL revenue, FAAC shared N2.257 billion to the federal government, disbursed N7.523 billion to the states and transferred N5.266 billion to the local councils.

Further, from the N671.392 billion Exchange Difference earnings, it gave central government N316.054 billion, the states N160.306 billion, the local government areas N123.590 billion, and the oil-producing states N71.442 billion as 13 per cent derivation revenue.

Economy

Okitipupa Plc, Two Others Lift Unlisted Securities Market by 0.65%

Published

1 day ago

14/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.65 per cent gain on Friday, December 13, boosted by three equities admitted on the trading platform.

On the last trading session of the week, Okitipupa Plc appreciated by N2.70 to settle at N29.74 per share versus Thursday’s closing price of N27.04 per share, FrieslandCampina Wamco Nigeria Plc added N2.49 to end the session at N42.85 per unit compared with the previous day’s N40.36 per unit, and Afriland Properties Plc gained 50 Kobo to close at N16.30 per share, in contrast to the preceding session’s N15.80 per share.

Consequently, the market capitalisation added N6.89 billion to settle at N1.062 trillion compared with the preceding day’s N1.055 trillion and the NASD Unlisted Security Index (NSI) gained 19.66 points to wrap the session at 3,032.16 points compared with 3,012.50 points recorded in the previous session.

Yesterday, the volume of securities traded by investors increased by 171.6 per cent to 1.2 million units from the 447,905 units recorded a day earlier, but the value of shares traded by the market participants declined by 19.3 per cent to N2.4 million from the N3.02 million achieved a day earlier, and the number of deals went down by 14.3 per cent to 18 deals from 21 deals.

At the close of business, Geo-Fluids Plc was the most active stock by volume on a year-to-date basis with a turnover of 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.

In the same vein, Aradel Holdings Plc remained the most active stock by value on a year-to-date basis with the sale of 108.7 million units for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with a turnover of 297.3 million units worth N5.3 billion.

Economy

Naira Trades N1,533/$1 at Official Market, N1,650/$1 at Parallel Market

Published

1 day ago

14/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1 on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.

The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.

The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.

The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.

Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.

In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.

At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.

Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).

Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.