Tax expert decries planned removal of VAT, stamp duty

The President, Chartered Institute of Taxation of Nigeria, Mr Mark-Anthony Dike on Monday said the removal Value Added Tax (VAT) and stamp duty on capital market activities would affect government revenue.

He said that government’s plan to remove VAT would equally affect provisions on capital goods and services.

Dike made the assertion in an interview with the News Agency of Nigeria (NAN) in Abuja.

NAN recalls that the Coordinating Minister for the Economy, Dr Okonjo-Iweala had in December 2012 announced the removal of Stamp Duty and VAT from capital market activities.

According to her, move is part of government’s policy aimed at revamping the nation’s capital market.

NAN reports that in spite of government pronouncements, the capital market waivers have not been implemented.

He said that the key element of tax was for government to moderate economic development as well as raise money to provide for capital goods and services.

“Government either imposed high tax to dissuade an activity or reduce tax to encourage an economic activity as was the case with VAT and stamp duty on capital market.’’

Dike said that the removal of VAT and stamp duty on capital market transaction would encourage investors to raise funds at a cheaper rate.

“The key issue essentially is to remove or minimise cost of doing business and encourage people to go to the capital market to raise funds at a cheaper cost

“What government is trying to do is to use taxation to stimulate economic activity within the country.

“If wavering tax will spore more people to the capital market and create some level of stability and confidence in the Nigeria economy then, I support it,’’ Dike said.

He also described the payment of VAT and stamp duty on the same transactions as double taxation that should not be encouraged.

“We have to make up our minds which one we want to impose because we cannot have VAT and stamp duty being imposed simultaneously on the same transaction,’’ he said.

On recapitalisation of the stockbroking firms, he said it was a welcome development that would engender market confidence and investors protection.

“The issue of recapitalisation is key, otherwise the ability of the business to payback in the case of financial difficulty becomes a problem when they have a low capital base. (NAN)