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Market operators await implementation of waivers on VAT, stamp duties

By BusinessNews Staff on May 6, 2014

One year and five months after President Goodluck Jonathan approved waivers and incentives to boost capital market activities, some of those waivers are yet to be implemented, THIISDAY checks have revealed.

As part of efforts to revive the Nigerian capital market, Jonathan had in December 2012 announced forbearance for some stockbroking firms and abolished stamp duties and VAT payment on secondary market transactions.

The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, who announced the incentives and waivers, had stated that the decision was taken by the federal government to resuscitate the market.

However, while the forbearance for stockbrokers was implemented last year, the payment of stamp duties and VAT on secondary market transactions continue.
The Director General of the Securities and Exchange Commission (SEC), Ms. Arunma Oteh had last year explained that the delay was due to non-gazetting of the approval.

According to her, the process involves the Ministry of Finance, Ministry of Justice and Federal Inland Revenue Service (FIRS), saying the number of agencies involved was also an issue.

However, market operators who spoke on the development last week called for quick implementation of the incentives to make the market for attractive.

For instance, the Group Managing Director of BGL Group, Mr. Albert Okumagba said the quick implementation of incentives and waivers would attract stronger interest in the market.

“I strongly believe that speedy implementation of decisions by regulators and government would also help boost confidence of investors. For example, the quick implementation of the removal of stamp duties and VAT payment on secondary market transactions could attract stronger interest in the market,” Okumagba stated.

Another market operator, who spoke on the condition of anonymity, said those involved in the implementation should put their acts together and ensure the order takes effect.

“While one must acknowledge the intricacies due to the number of agencies involved in the implementation, it is not encouraging to note that over one year after a decision was taken and approval given by the president, it is yet to be implemented. This, to me, sends wrong signals to the investing public and entire capital market community. I believe the government should keep to its promises,” he said.

The operators stressed that implementation these incentives would boost efforts to reduce cost of transactions in the Nigerian capital market, which is believed to be holding back significant patronage from the market.

Realising the need to attract more patronage through reduced cost of doing business in the market, the Nigerian Stock Exchange (NSE) and SEC have put machinery in place to review the cost of transactions in the market with a viewing to making it more competitive.

Oteh explained recently that the commission was working with the NSE and Central Securities Clearing System (CSCS) on a transaction cost analysis. The outcome of the analysis, according to her, would help determine what the appropriate transaction cost to be charged by operators.

“We are working with the stock exchange along with the CSCS to sponsor the transaction cost analysis. This is because the issue around cost of transaction in Nigeria is an issue that we have heard about and I think it is important that we have the exact data. When the volume of transactions goes up, the brokers and other participants would be more inclined to reducing cost,” Oteh said.

[This Day]

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