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Non-implementation of VAT, stamp duty waiver angers shareholders

By on May 22, 2014

One year and five months after the Finance ministry promised that it would waive Value Added Tax and stamp duty on capital market transactions; it has failed to keep its promise, leaving shareholders angry.

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, had explained in a statement in December 2012 that the waiver was aimed at reviving activities on the Nigerian Stock Exchange.

She was quoted as saying, “Taxes on stock exchange transactions fees are as high as 12 per cent (five per cent in VAT and up to seven per cent in stamp duties) – much higher than in other jurisdictions, and these constitute a major disincentive to investment in the Nigerian capital market.

“I will like to announce that the Federal Government has consented to waive the 0.075 per cent stamp duties payable on stock exchange transaction fees; and, exempt from VAT, commissions (a) earned on traded values of shares, (b) payable to the Securities and Exchange Commission, and (c) payable to the Nigerian Stock Exchange and the Central Securities Clearing System, by including these commissions in the list of VAT-exempt goods and services.”

Our correspondent gathered that despite repeated calls for the waiver to be implemented, there was no indication that it would happen any time soon, and shareholders expressed their disappointment over the matter and questioned the commitment of the minister to the development of the capital market.

The Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said, “For me, I think the government has not been proactive because it had been said a long time ago that these things – the taxes and other levies – are holding the capital market back and should be removed.

“But I don’t know why it has not been removed up till now. It means the government has not been proactive and it is very unfortunate.”

Okezie said if the government was serious about the development of the capital market, it should remove both levies once and for all.

This, he said, was because the waiver would improve confidence in the market and attract more investors.

Besides, Okezie said asking investors to pay Value Added Tax and stamp duty meant the government was encouraging multiple taxation.

“As it stands, we are talking about double taxation. When you buy shares, you pay the Securities and Exchange Commission, you pay the Central Securities Clearing System and you pay the NSE. At the same time, there is a 10 per cent withholding tax on the dividend given. So, what are you asking for VAT for?,” he said.

On his part, the President, Renaissance Shareholders Association of Nigeria, Mr. Olufemi Timothy, said it was disappointing that the government had failed to keep its promise.

He said, “We are not happy about it, especially as the government said this thing would be done and afterwards failed to do it. It says a lot about the integrity of the Federal Government. When the Minister of Finance says something, it should be reliable and it should be a promise that will be fulfilled.”

When contacted on the matter via email on April 30, the spokesperson for the Minister of Finance, Mr. Paul Nwabuikwu, said he would make enquiries and get back to our correspondent.

A reminder sent to him on May 5 got no response and calls to his mobile phone showed it was switched off.

 

 

[Punch]

One Comment

  1. Adewole

    May 23, 2014 at 11:55 am

    Government’s various interventions in the capital market before now demonstrate that government is really interested in the growth of the sector. We may have to exercise some patience for all promises to be fully fulfilled.