EXPIRATION OF VAT (EXEMPTION OF COMMISSIONS ON STOCK EXCHANGE TRANSACTIONS) ORDER ON STOCK EXCHANGE TRANSACTIONS
In 2014, the Federal Government of Nigeria in its bid to resuscitate the Nigerian Capital Market, encourage investments and more trading activities in the Nigeria Stock Exchange Market made public an exemption order on stock market transactions.
The Federal Government of Nigeria through the then Coordinating Minister for the Economy and Minister of Finance in exercise of her powers under Section 38 of the Value Added Tax (VAT) Act, Cap. V1, Laws of the Federation of Nigeria, 2004 issued an executive order exempting income from certain stock exchange transactions from VAT. The Order which was officially gazetted and dated 30 July 2014 became effective from 25 July 2014.
The exemption covered commissions earned from the following transactions:
- Earned on Traded Value of Shares;
- Payable to Securities and Exchange Commission;
- Payable to the Central Securities Clearing System; and
- Payable to the Nigeria Stock Exchange.
The exemption is applicable for a period of 5 years from the date of commencement of the executive order (25 July 2014).
Consequently, from July 24, 2019 VAT should be charged and paid on all stock exchange transactions to the Federal Inland Revenue Service (FIRS).
In view of the aggressive tax drive by the present government, affected entities (capital market operators) are to ensure that from the date of expiration of the executive order, VAT is charged on all stock market transactions and same is remitted to FIRS not later than the 21st day following the month of transaction. This is necessary so that the business entity does not bear the VAT liability where it was not originally charged.
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