More Shareholders Want VAT Charges Exemption Extended 

0

Goddy Egene

Shareholders under the aegis of Ibadan Zone Shareholders Association (IBZSA) have added their voices to calls on the federal government to extend the exemption of Value Added Tax (VAT) charges on transactions on the Nigerian Stock Exchange (NSE), pending when the economy and market fully recovers.

The five-year exemption on brokerage commission and transactions fees  charged by Securities and Exchange Commission(SEC), NSE and Central Securities Clearing System(CSCS) Plc  the federal government gave in 2014, expired last Wednesday.  

And the NSE had notified stockbrokers that effective Thursday July 25, 2019, the five per cent VAT would now be charged.

Owing to that, some investors had urged the government to extend the exemption. Lending their voices to earlier calls, the IBZSA members said the market was already saturated with various taxes and commission on transactions. IBZSA, in a statement signed by its chairman, Mr. Eric Akinduro and General Secretary, Mr. Ayoola Olufemi said the  inclusion of VAT would  further send negative signals to the investment community, leading to   loss of shareholder value and  discourage many investors from investing in  the market. 

 “Recent statistics show that return on our investments has been discouraging vis-à-vis capital appreciation. In view of this and on behalf of the entire members of the IBZSA, we do hereby request that the Federal Government of Nigeria should extend the VAT exemption pending the time we have a robust economy,” they said. 

According to them, the shareholders’ community was of the opinion that, the resumption of VAT charges in the market by the government portrays a bad policy for the growth of the Nigerian capital market  considering persistent decline  the market has witnessed in recent times.

 “And, also signalled the insensitive of government to the plight of investors and development of small and medium scale enterprises in Nigeria,” the shareholders added.

The shareholders urged government to implement policies that would encourage domestic investors to participate in the market, stressing that foreign investment outflow had outpaced foreign investment inflow every month since January 2019.

“In total, foreign investor outflow for the period between January and June 2019 stood at N257.8 billion compared to N214.9 billion in inflows over the same period. 

“Domestic retail investor investment was N329.6 billion compared to N285 billion June 2019 year to date. It is, however, believed that owing to the fact of low business activity in the market, government should begin to reconsider it stand on VAT or put it on hold, so as to continue to encourage local investors,” they said.