Post Views: 224 The Federal Government will from Thursday, July 25, 2019, restore Valued Added Tax (VAT) on all stock market transactions, following t...
The Federal Government will from Thursday, July 25, 2019, restore Valued Added Tax (VAT) on all stock market transactions, following the exemption of the five-year exemption the day before.
Recall that the order for exemption of VAT from all NSE transactions was granted by the Federal Government in 2014 (effective July 25, 2014) for five years.
A notice to dealing member (stockbroking) firms by Olufemi Shobanjo, Head, Broker-Dealer Regulation at the NSE, recalled its circular dated October 27, 2014, referenced BDR/CIR/GOI/10/14 on the VAT exemption of commissions on stock exchange transactions Order granted by the Coordinating Minister for the Economy and Minister of Finance in 2014, as published in the government’s Official Gazette No. 95, Vol. 101 issued on July 30, 2014.
The order, he noted, became effective on July 25, 2014, and valid for a five-year period, and will expire on 24 July 2019, following which Dealing Members, in the absence of a further extension, are to charge VAT effective 25 July 2019, on all commissions applicable to capital market transactions.
Listed are: commissions earned “on traded values of shares; and payable to The Nigerian Stock Exchange (NSE) and the Central Securities Clearing System Plc (CSCS).”
As part of this, the NSE’s notice explained that the “CSCS will automate the deduction of VAT charged on commissions payable to The NSE and the CSCS;” following which dealing members are to resume the deduction of VAT on commissions earned.
The NSE also advised dealing members to engage their software vendors for the automation of VAT deductions and communicate the same to their clients ahead of the effective date.
Dealing members were reminded to ensure that all VAT charged on such “commissions earned are remitted to the Federal Inland Revenue Service (FIRS) as and when due; and that the corresponding evidence of remittance is retained for future reference.
Please be guided accordingly.”
Recall that waiver on the 5% VAT on brokerage commission was granted to encourage investment inflows into the nation’s capital market in the aftermath of the economic meltdown.