By Dipo Olowookere
From Friday, July 26, 2019, investors in the Nigerian capital market may begin to pay value added tax (VAT) on every transaction they execute on the Nigerian Stock Exchange (NSE).
This is because the five-year tax holiday activated in 2014 will come to an end on Thursday, July 25, 2019.
In 2014, the then Minister of Finance, Mrs Ngozi Okonjo-Iweala, waived VAT payment for stock exchange transactions so as to encourage more participation of local investors.
She had exercised her powers as Finance Minister under Section 38 of the Value Added Tax (VAT) Act to make investors not to pay VAT from commissions earned on the traded value of shares, to the Securities and Exchange Commission, NSE and the Central Securities Clearing System (CSCS).
Except President Muhammadu Buhari announces his cabinet before July 25, 2019 and the new Minister of Finance extends the waiver, investors will likely begin to VAT on their transactions.
In a statement issued then on Monday October 27, 2014, the CEO of NSE, Mr Oscar Onyema, had commended the Minister for implementing the elimination of VAT on stock market transaction fees.
He had said investments should not be categorized as consumer goods purchases, but as a platform to promote a long-term savings culture that could be channelled towards economic growth and development.
According to him, “The elimination of VAT on stock market transaction fees will ultimately reduce the cost of transactions for investors, and will encourage investments in the Nigerian capital market.”
Business Post reports that the VAT exemption has been effective on all commissions applicable to capital market transactions and investors would want an extension so as to encourage more participation.
