Tobi Aminu

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

The re-introduction of Value Added Tax charges on transactions in the Nigerian capital market takes effect from today, July 25, 2019. The VAT charges on transactions in the capital market were suspended in 2014 by the then Minister of Finance, Dr Ngozi Okonjo-Iweala, to encourage increased trading activities in the market. Okonjo-Iweala had set up a committee to revive activities on the Nigerian Stock Exchange, following the financial crisis and extended periods of negative market sentiments recorded on the bourse in previous years. The committee reached a decision to waive the 0.075 per cent stamp duties payable on stock exchange transaction fees and exempt from VAT commissions earned on traded values of shares, commissions payable to the Securities and Exchange Commission and commissions payable to the Nigerian Stock Exchange, the Central Securities Clearing System and the NASD OTC Securities Exchange. While stakeholders in the capital market have called for an extension of the waiver period, the NSE and the NASD are set to resume deduction of VAT on commissions applicable to capital market transactions referred, while awaiting further directives emanating from ongoing engagements with the Federal Government on the issue. The NASD said, “We shall notify the market of any new developments, but in the absence of none, kindly take this as a notice to resume deduction of VAT on commissions applicable as this will ensure a smoother and more transparent OTC market.”   Source: Investor king

Oxfam in Nigeria has called on the federal government to fast-track action on the approved new National Tax Policy in order to tackle corporate crimes. Oxfam Country Director, Constant Tchona, made the call in Abuja at the public unveiling of the ‘Fair Tax Index report and the Commitment to Reducing Inequality Index (CRII)’ report, with the theme ‘West Africa Inequality Crisis: The Fight Against Inequality through Progressive Taxation’ in Abuja. He said Oxfam had developed policy recommendations and strategies, saying it would be used to advocate for a fairer tax system that helps to redistribute prosperity from the richest in the society to the very poorest. Tchona, explained that a 2015 Oxfam’s report highlighted the inefficiency of Nigeria’s tax incentives where it submitted that the country loses N580 billion annually through tax incentives to multinational corporations. To put this in perspective, he noted that the health budget was only one third of this amount in 2015. The country director added that Nigeria needs to rework its strategies and sets its economic priorities right by investing in agriculture, manufacturing and infrastructure rather than waste its hard-earned resources on unproductive and redundant tax incentives. Tchona explained further that the official Federal Inland Revenue Services (FIRS) numbers suggest that the entire tax system was fraught with crippling challenges of weak enforcement, corruption and outright evasion. According to him, “The records show that about 30 per cent of companies in Nigeria are involved in tax evasion and also 25 per cent of registered companies in the country are not paying tax. “Taxpayers often opt to negotiate with corruption tax administration staff in return for gratifications and reduced sums to the coffers of the government.” Tchona said the fiscal incentives granted with the hope of stimulating investments into the country’s economy were eroded with poor governance and lack of transparency, especially when the central bank had confirmed that there was no cost benefit analysis to justify the exemptions and when there was no check in discretionary powers residing with the Executive in granting exemptions. He stressed that the Voluntary Assets and Income Declaration Scheme (VAIDS) was designed to increase tax revenue by encouraging voluntary disclosure of any previously undisclosed income liable for tax and to bring as many people as possible into the tax net. This, he said resulted in $5 million extra revenue which was about N1.8 billion, but this was only 10 per cent of the expected amount. Tchona, however, called on the federal government to opt for aggressive taxation of the informal sector in order to meet the revenue target. “There is need for the Nigerian government to fast-forward action on the New National Tax Policy approved and clamp down on corporate crimes. “New legislation and rules to cope with current realities should be enacted along with introduction of cutting edge technology. “The National Assembly should enact a law to punish enablers of tax evasion such as lawyers, accountants and bankers and should be made to face fines of up to 100 per cent of tax evaded. “The National Assembly should enact law that will criminalise totally the actions of middlemen- banks, auditors and lawyers that facilitate illicit financial flows. When such professionals act contrary to existing regulations, they should be held accountable in Nigeria. “This can be enforced through strengthened professional association bodies.” While presenting his paper on, ‘Understanding the Impact of Inequality in Nigeria and Policy Recommendations,’ the Country Director of Plan International Nigeria, Dr. Husseini Abdul, said tax was not only about income for government, but one of the best way to tackle inequality According to him, “We can’t have conversation about the development of this country without talking about inequality. The trajectory of development is a problem and economic policies are needed to deal with them.”   Source; Investor king