- Nigerian Stock Investors to Pay 5% VAT
Stock investors are expected to start paying Value Added Tax (VAT) of 5 percent on all transactions carried out on the Nigerian Stock Exchange (NSE).
All trading companies registered with the NSE have been notified to resume collection of VAT effective from Thursday, July 25, 2019.
This follows the expiration of Order for Exemption of VAT approved by Ngozi Okonjo-Iweala on July 25, 2014 to lure investors to the exchange and help support the foreign exchange market. The exemption, which was for five years, will expire on July 24, 2019.
However, analysts are worried about the timing of the VAT given the current situation of the NSE. The stock exchange has lost over 10 percent in value this year despite listing MTN Nigeria and Airtel Africa.
Obinna Igwe, a Lagos-based stockbroker, said this could further weigh on market sentiment and deepen market rout.
“This could further dampen the morale of investors, the market is waiting for the right policies to spur growth and not this kind of policy,” he said. Emeka Uzom, a stockbroker, said the order of exemption for VAT on all NSE transactions conceived in 2014 did not really achieve its aim.
“There has to be more robust policy thrust by the government to drive the capital market,” he said.
Market experts are blaming President Buhari for the current bearish trend in the stock market as investors that were supposed to stimulate the market are wary of lack of National Executive Council months after the general elections.
The stock market has lost over 10 percent so far this year without 5 percent VAT, with new VAT directive the stock market could plunge even further.