Economy
Investors Lament Resumption of 5% VAT on NSE Transactions
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.
By Dipo Olowookere
The bulls returned to the Nigerian Exchange (NGX) Limited on Wednesday, helping the platform to close in green territory by 0.41 per cent.
Bargain-hunting activity by investors lifted the stock market at midweek, with all but one sector pointing northwards.
The banking counter appreciated by 0.78 per cent, the insurance sector grew by 0.62 per cent, the consumer goods industry improved by 0.26 per cent, and the industrial goods index expanded by 0.05 per cent, while the energy segment lost 0.01 per cent.
When the closing gong was struck to close trading activity, the All-Share Index (ASI) was up by 979.36 points to 242,729.51 points from 241,750.15 points, and the market capitalisation increased by N629 billion to N155.781 trillion from the previous day’s N155.152 trillion.
Airtel Africa gained 10.00 per cent to close at N3,323.40, CAP appreciated by 9.99 per cent to N193.20, Zichis expanded by 9.97 per cent to N27.58, RT Briscoe advanced by 9.95 per cent to N14.15, and FTN Cocoa rose by 9.92 per cent to N7.31.
Conversely, SUNU Assurances lost 10.00 per cent to trade at N4.05, Guinness Nigeria slipped by 9.99 per cent to N402.60, Caverton depreciated by 8.33 per cent to N5.50, Fortis Global Insurance shrank by 7.69 per cent to N1.08, and May and Baker decreased by 6.82 per cent to N32.00.
Investor sentiment was strong after the bourse finished with 46 appreciating equities and 24 depreciating equities, indicating a positive market breadth index.
CWG was the most active stock with a turnover of 421.7 million units worth N8.9 billion, Access Holdings transacted 85.4 million units valued at N2.1 billion, Chams traded 83.4 million units worth N267.0 million, Secure Electronic Technology sold 59.8 million units valued at N59.5 million, and Zenith Bank exchanged 56.0 million units for N7.2 billion.
In all, a total of 1.4 billion shares valued at N59.4 billion were bought and sold by investors in 85,804 deals at midweek versus the 1.3 billion shares worth N75.2 billion transacted in 102,665 deals a day earlier, representing an increase in the trading volume by 7.69 per cent, and a decline in the trading value and number of deals by 21.01 per cent, and 16.42 per cent, respectively.
By Adedapo Adesanya
The oil market fell sharply on Wednesday on optimism that the US and Iran were close to an agreement to end the conflict that has caused the largest energy supply disruption in history.
Brent crude futures tumbled nearly 8 per cent to close at $101.27 per barrel, while the US West Texas Intermediate (WTI) crude futures lost about 7 per cent to trade at $95.08.
Reuters reported that Pakistan said the United States and Iran were closing in on an agreement on a one-page memorandum of understanding.
Iran said on Wednesday it was reviewing a new US proposal and would convey its response soon via Pakistan. The country had said earlier that it would only accept a fair and comprehensive agreement.
US media outlet Axios reported that America expects Iranian responses on several key points in the next 48 hours, citing sources that said this was the closest the parties had agreed since the war began.
However, President Donald Trump on Wednesday expressed doubt that a deal would be finalised. He said it was “perhaps a big assumption” to think that Iran would accept the proposal. He threatened to resume military strikes on Iran if it did not agree.
Equally, a senior Iranian parliament member said the US proposal was more of a wish list than a reality.
Earlier this week, the US military said that it destroyed several Iranian small boats as part of efforts to help stranded ships exit the Strait of Hormuz, a waterway responsible for 20 per cent of crude and Liquified Natural Gas (LNG) flows. Market analysts noted that the global oil flow would take time to normalise even if the strait is restored.
The Strait of Hormuz closure has resulted in a drawdown in global oil and fuel inventories as refineries try to offset production shortfalls. Surging oil and energy costs are already creating demand destruction globally.
The US Energy Information Administration (EIA) said on Wednesday that US crude and fuel inventories continued to draw down last week as countries around the globe scrambled to fill supply gaps caused by disruptions from the conflict in the Middle East. Crude oil stocks fell by 2.3 million barrels to 457.2 million barrels last week.
By Modupe Gbadeyanka
The management of Dangote Petroleum Refinery and Petrochemicals Limited has revealed that the price of Premium Motor Spirit (PMS) remains at N1,275 per litre.
Earlier on Wednesday, there were reports that the company increased its ex‑depot price by N75, some hours after renewed hostilities in the Middle East.
On Monday evening, it was reported that Iran fired missiles at its neighbours in the Gulf region after the United States seized two Iranian-linked vessels on the Strait of Hormuz.
These actions briefly raised the price of crude oil on the global market to over $115 per barrel, but it quickly eased to almost $100 per barrel on Wednesday.
Shortly after it was reported that Dangote Refinery had pushed its PMS gantry price to N1,350 per litre, the price was reversed.
Confirming this in a statement made available to Business Post, Dangote Refinery said it is sustaining its current prices to reaffirm “its commitment to supporting stability in the domestic energy market and cushioning the wider economy against external shocks.”
“By absorbing prevailing cost pressures, the refinery continues to help moderate inflationary risks, promote energy affordability, and ensure uninterrupted supply amid ongoing global uncertainties,” another part of the statement read.
The private refiner “reaffirmed its dedication to the steady supply of high‑quality petroleum products to the Nigerian market, while supporting national objectives of price stability and energy security.”
It urged the public “to rely solely on official statements from Dangote Petroleum Refinery and Petrochemicals Limited for accurate and up‑to‑date information on its operations and pricing.”
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn