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 Aduragbemi Omiyale
Stanbic IBTC Nominees Limited has been commended for its critical role in the Nigerian capital market, especially for safely keeping non-pension assets.
For the past 30 years, the company has provided custody services in Nigeria, and to celebrate this milestone, it was honoured with a closing gong ceremony at the Nigerian Exchange (NGX) Limited.
The milestone reflects the institution’s longstanding contribution to investor confidence and the continued development of the nation’s capital market.
Welcoming the organisation to Customs Street, the chief executive of NGX, Mr Jude Chiemeka, commended its three decades of custody services, recognising the firm’s role in strengthening investor confidence and enhancing market safety.
He highlighted NGX’s continued investment in technology, which he said has enabled over 2.6 million active retail investors to trade on the platform.
“Technology continues to be at the heart of our strategy,” Mr Chiemeka said, noting that a vibrant and secure marketplace remains essential to investor participation.
In his remarks, the chief executive of Stanbic IBTC Bank, Mr Wole Adeniyi, thanked NGX for its continued partnership, saying, “We are thrilled to be here today, commemorating not just our journey, but also the remarkable progress made by the NGX.”
He noted that the collaboration between the two institutions has continued to drive innovation, product development and thought leadership across the industry.
“We are dedicated to raising standards within the industry as part of Standard Bank Group. Our focus remains driving the growth and development of Nigeria’s capital market. Indeed, Nigeria is our home, and we drive her growth,” he added.
The chief executive of Stanbic IBTC Nominees, Mr Babatunde Majiyagbe, reflected on the evolution of the business from the era of physical share certificates stored in fireproof vaults to today’s fully dematerialised market, where securities are held electronically.
“We started with holding custody of physical certificates, investing in vaults with fire and dust protection, so those certificates could be presented when needed,” Mr Majiyagbe recalled, noting that while the market has evolved significantly, the commitment to service excellence has remained unchanged.
“What has endeared a lot of investors to the market is that they are dealing with a reputable organisation like ours. We are high on good governance, and high on technology, making the process of investment in Nigeria easier,” he said.
Mr Majiyagbe added that Stanbic IBTC Nominees’ role goes beyond just attracting foreign portfolio investment (FPI) and capital.
“For us, it’s not just about FPI; but also about the value we have delivered over 30 years. Stanbic IBTC Nominees continue to be the eyes and ears of foreign and domestic investors in our market,” he stated.
Mr Majiyagbe added that the firm has also supported the development of market rules and safeguards, noting: “We have, over the years, advocated for growth, change, transformation and stability in our capability to provide services to domestic and foreign portfolio investors continuously.”
The deputy chief executive of Stanbic IBTC Bank and Chairman of Stanbic IBTC Nominees, Mrs Bunmi Dayo-Olagunju, said the next phase of growth will build on the institution’s legacy of trust.
“For 30 years, we’ve delivered growth, security, and client confidence. That’s why investors have stayed with us and why new business keeps coming.
“Our target for this new phase of growth is simple: build on that trust and ride the acceleration in Nigeria’s economic activity.
“With custody, settlement, capital raise, and advisory integrated on one platform, we’re not just a custodian. We’re an infrastructure. We look forward to building on that trust for generations to come, serving both local and international clients. Hopefully, we’ll have another 100 years of maintaining that trust with local and international markets,” Mrs Dayo-Olagunju said.
By Dipo Olowookere
The positive market breadth index recorded by the Nigerian Exchange (NGX) Limited could not save it from further claws of the bears on Friday.
The major performance indicators, the All-Share Index (ASI) and the market capitalisation, depreciated by 0.03 per cent and 0.01 per cent, respectively.
The ASI was down by 78.58 points to 245,283.68 points from the previous day’s 245,362.26 points, and the market capitalisation receded by N14 billion to N158.326 trillion from Thursday’s N158.340 trillion.
Business Post reports that market participants traded 943.0 million equities valued at N46.7 billion in 55,480 deals compared with the 2.1 billion equities worth N230.8 billion transacted in 48,231 deals a day earlier.
This implied that the trading volume shrank by 55.10 per cent, the trading value reduced by 79.77 per cent, and the number of deals surged by 15.03 per cent.
An analysis of the sectoral performance showed that the consumer goods space crashed by 0.60 per cent and the energy index went down by 0.09 per cent.
However, the banking sector improved by 1.90 per cent, the insurance counter expanded by 0.75 per cent, and the industrial goods segment soared by 0.10 per cent.
There were 33 appreciating stocks and 29 depreciating stocks during the last trading session of the week and month of July, indicating bullish investor sentiment despite the poor outcome.
CAP lost 9.97 per cent to trade at N128.25, Veritas Kapital depreciated by 9.49 per cent to N1.43, Vitafoam Nigeria slipped by 7.70 per cent to N179.80, The Initiates dipped by 6.67 per cent to N28.00, and NAHCO crashed by 6.63 per cent to N155.00.
Conversely, Eterna gained 10.00 per cent to sell for N33.00, Consolidated Hallmark also grew by 10.00 per cent to N8.36, McNichols expanded by 9.52 per cent to N5.75, Honeywell Flour increased by 8.96 per cent to N18.25, and First Holdco chalked up 8.00 per cent to quote at N129.55.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its bullish run on Friday, July 31, by 0.99 per cent.
This raised the NASD Security Index (NSI) by 43.54 points to 4,431.71 points from 4,388.17 points, and lifted the market capitalisation by N26.13 billion to N2.659 trillion from N2.633 trillion.
The growth came amid a significant decline in the activity level, as the volume of securities decreased by 73.0 per cent to 690,990 units from 2.6 million units, the value of securities slid by 15.0 per cent to N75.0 million from the preceding session’s N88.3 million, and the number of deals contracted by 31.6 per cent to 26 deals from the 38 deals recorded a day earlier.
The most active stock by value on a year-to-date basis remained Great Nigeria Insurance (GNI) Plc, with a turnover of 3.4 billion units valued at N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.6 million units exchanged for N5.5 billion.
The most active stock by volume on a year-to-date basis was also GNI Plc, with the sale of 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
Investor sentiment was bullish yesterday after a positive market breadth index triggered by five price gainers and two price losers, led by 11 Plc, which gave up N14.99 to close at N225.01 per share versus the previous day’s N240.00 per share, and MRS Oil Plc, which shed N14.55 to settle at N132.00 per unit versus N146.55 per unit.
However, Nipco Plc gained N41.50 to sell at N456.50 per share compared with the preceding session’s N415.00 per share, FrieslandCampina Wamco Nigeria Plc appreciated by N12.93 to N147.93 per unit from N135.00 per unit, Nitrox Industrial Gases Plc improved by N1.00 to N20.00 per share from N19.00 per share, CSCS Plc soared by 54 Kobo to N102.00 per unit from N101.46 per unit, and Industrial and General Insurance (IGI) Plc jumped by 1 Kobo to 50 Kobo per share from 49 Kobo per share.
