August 5, 2019

Investors and dealers are now required to pay Value-Added Tax (VAT) for transactions carried out on the Nigerian Stock Exchange (NSE), following the expiration of a five-year exemption. The previous order on exemption of the tax was enforced by former Finance Minister, Ngozi Okonjo-Iweala. During her tenure, the minister exempted VAT deductions from commissions earned on the traded value of shares, commissions payable to the Securities and Exchange Commission (SEC), and commissions payable to the Central Securities Clearing System (CSCS).  The move to exempt VAT at that time was aimed at reducing the cost of transactions for investors and to encourage investments in the Nigerian capital market. The five-year exemption became effective on Friday, July 25, 2014, and thus ceased on Wednesday, July 24, 2019. In a circular issued by the Nigerian Stock Exchange (NSE), Head of Broker-Dealer Regulation, Olufemi Shobanjo, stated that barring any further extensions from the federal government, VAT was to be charged on all commissions applicable to capital market transactions effective July 25, 2019. Thus, dealing members are required to resume the deduction of VAT on commissions earned.  Specifically, the commissions on which the tax is applicable include those earned by dealers on traded values of shares as well as those payable to the NSE and CSCS. Also, the exchange revealed that CSCS would automate the deduction of VAT charged. Consequently, dealing members are to engage their software vendors for the automation of VAT deductions. Furthermore, the NSE directed all dealing members to ensure that the VAT charged on the commissions earned are remitted to the Federal Inland Revenue Service (FIRS) as and at when due; and that the corresponding evidence of remittance is retained for future reference. A Value-Added Tax is an indirect tax which is borne by the final consumer. In relation to capital market transactions, any VAT charged on commissions is passed on to issuers and investors, as the case may be.  With the expiry of the exemption, it is expected that capital market transaction costs for retail investors, stockbrokers and institutions will rise. The development also means an increase in compliance costs for operators such as stockbrokers and the regulators in accounting and remitting VAT to the FIRS.   Source: Ventures Africa

The acting Chairman of the Manufacturers Association of Nigeria, Nasarawa State chapter, Mr Alfred Alogana, has expressed the body’s displeasure over the unfavourable tax regime in the state. He made special reference to the Gaseous Emission Tax, which manufacturers and producers of goods are subjected to by various agencies of the state government. Alogana stated these in an interview with Northern City News in Lafia on Thursday. According to him, the tax in question is outrageous and is adversely affecting the capacity of local manufacturers in the state. He said, “We asked what the Gaseous Emission Tax was all about and they said the generators we use for our business emit gas, which is poisonous, and so we were to pay for it. “We then asked if they were going to clean the gas from the atmosphere, but they could not explain anything, and they still went ahead to enforce the payment. “I don’t really know what they are after; they brought notices to us that we have to pay for gaseous emission. They force us to pay huge amounts. In their letter, it is N24,000 per producer per year.” “I don’t see legality of this. I don’t see anything good in it because it is the government that is supposed to supply electricity, but it is not doing it. So for somebody to get a generator to help himself to do what he is doing and contribute his quota to the state and be charged for it is unfair.” According to him, the Nasarawa State Government, through the state Ministry of Environment and Solid Minerals, has been compelling local manufacturers and producers in the state to pay this tax since 2018. He appealed to the state government to take another look at the tax, because manufacturers in the state were already overburdened by the problems of poor infrastructure, multiple taxation and a harsh business environment. When contacted, the Permanent Secretary, Ministry of Environment and Solid Minerals, Mallam Usman Abu, confirmed the introduction of the Gas Emission Tax, which he said was backed by legal notice No. 6 enacted in 2018.   Source: Punch