- NECA Opposes Stamp Duty Payment on Share Capital
To encourage the establishment of more companies in the country, the Nigeria Employers’ Consultative Association has called on the Federal Government to stop the payment of stamp duty on share capital.
The association suggested that a minimum flat fee should be introduced for the stamp duty payment, while responding to questions on how some proposed bills and amendment to some acts would affect private sector operators.
The employers’ group also called on the government to address the issue of appointment of auditors by Micro, Small and Medium Enterprises as contained in sections 357, 370-375 of the Companies and Allied Matters Act CAP C20, LFN 2004.
The Director-General, NECA, Mr. Olusegun Oshinowo, stated that for the country to improve on its ranking of ease of doing business and attract more investors, the act must align with international best practices that called for the elimination or reduction of payment of stamp duty on minimum share capital.
According to NECA, other clauses, which relate to multiple dictatorship and definition of small companies as provided in CAMA should be reviewed.
It said, “We also advocate that the requirement of a minimum share capital be abolished. Government should reduce significantly, or eliminate completely, the payment of stamp duty on share capital. Alternatively, a minimal flat fee should be introduced for the payment of stamp duty and incorporation/filing fees together regardless of the share capital of the company, in order to encourage the establishment of more companies.
“We believe that the MSMEs should be exempted from the requirement to appoint auditors whilst their annual turnover remains below a pre-determined threshold; exempt the MSMEs from the requirement to file audited financial statements along with their annual returns; and the format of the financial statements for the MSMEs should be simpler than for larger companies.”
The Senate had promised to fast-track the passage of over 40 priority bills recommended by the National Assembly Business Environment Roundtable, which would improve the Nigerian business environment and bring the country out of recession.
Commenting on the planned review of the Companies Income Tax Act, Oshinowo warned that the interpretation of Section 19 of the Act by the Federal Inland Revenue Service to impose an additional tax of 30 per cent corporate tax on dividend paid out of retained earnings after paying a 30 corporate tax to the government would amount to double taxation.
According to him, this will provide an incentive for companies to distribute all profits made in a particular financial year to shareholders even when there is compelling need to reinvest such profits in the business.
He added, “This policy encourages capital flight and incidental increase in the demand for foreign currency for repatriation instead of reinvestment, which is not good for the country. We request that the FIRS should issue a circular or financial order exempting retained earnings of all companies as long as corporate tax had earlier been paid in order to facilitate reinstatement of profits so as to generate more employment in Nigeria.
“Government must walk the talk by ensuring that all its agencies should guarantee that any policy they will be introducing henceforth must facilitate the ease of doing business and commerce, and not create bottlenecks.”
The association, however, approved of the National Development Bank of Nigeria (Establishment) Bill, the National Road Fund (Establishment) Bill, and the Petroleum Industry Bill all of which were aimed at improving the business environment in the country.
