Stockbrokers to charge 5% VAT on all NSE transactions

All dealing member firms of the Nigerian Stock Exchange (NSE) have been notified to resume charging of 5 percent Value Added Tax (VAT) on all NSE transactions effective next week Thursday July 25, 2019.

This follows the expiration of Order for exemption of VAT from all NSE transactions which was granted in 2014 by the Coordinating Minister of the Economy and the Honorable Minister of Finance.
As part of the Federal Government’s policy measures to encourage investments in the Nigerian capital market, the Order which became effective on July 25, 2014 was to operate for 5 years. It expires on July 24, 2019.

Following this development, VAT on commissions will now be charged on transactions conducted on the Nigerian Stock Exchange. Subsequently, a 5percent VAT on brokerage commission earned, NSE fees and CSCS fees will be restored effective 25th July 2019.

Federal Government had 5 years ago exempted from VAT commissions earned on traded value of shares payable to Securities and Exchange Commission (SEC); payable to the Nigerian Stock Exchange (NSE); and payable to the Central Securities Clearing System (CSCS).

At the NSE, despite that prices remain attractive across the board, investors are not positioning in anticipation of an impending market correction and have not shown the willingness to take advantage of beaten down prices.

Analysts had noted VAT on NSE transactions will impact negatively on the market that is already down and struggling to recover. For instance, the domestic investors are not buying stocks as they should and the foreign investors are not playing big here. The stock market is down by -9.83percent year-to-date (Ytd).

Iheanyi Nwachukwu