Brokerage companies operating in the Nigerian capital market have informed their clients of a slight increase in charges for the purchase and sale of their shares at the Nigerian Stock Exchange (NSE).
The hike, according to them, is to reflect the implementation of the raising of the value added tax (VAT) in the country by 50 percent by the federal government with effect from today, Saturday, February 1, 2020.
In the newly signed Finance Act by President Muhammadu Buhari, VAT was raised from 5 percent to 7.5 percent. This affects goods and services, including stock trading in the country.
One of the major stockbrokers in Nigeria, Meristem, told its customers in a notice on Friday, January 31, 2020, that the new 7.5 percent VAT will affect three different fees charged on NSE transactions.
“Effective February 1, 2020, Value Added Tax (VAT), charged on commissions related to capital market transactions, will increase from 5 percent to 7.5 percent.
“This is in line with the implementation of the 2019 Finance Act.
“This change in VAT charged, impacts commissions applicable to the capital market transactions, earned by dealing members on the traded value of shares; payable to the Nigerian Stock Exchange; and payable to the Central Securities Clearing Systems Plc,” the message from Meristem Stockbrokers Limited, which thanked its clients “for your continuous patronage,” reads:
In July 2019, investors in the nation’s stock market resumed the payment of VAT commission on all transactions after enjoying exemption for five years. Though this did not go down well with them. Efforts were made to reverse this policy, but they have not yielded meaningful results yet.
On July 25, 2014, the federal government, through the then Minister of Finance and Coordinating Minister of the Economy, Mrs Ngozi Okonjo-Iweala, commenced the exemption of VAT payment on all NSE transactions and on July 24, 2019, it elapsed.
