As a fiscal measure to encourage investment in the capital market, the Federal Government of Nigeria issued the VAT (Exemption of Commissions on Stock Exchange Transactions) Order, 2014 (Exemption Order) on 25 July 2014. The Exemption Order amended the First Schedule of the Value Added Tax (VAT) Act 2004. All commissions on capital market transactions were therefore exempt from VAT. This includes commissions earned on the traded value of shares. It also exempts commissions payable to the Securities and Exchange Commission, Nigerian Stock Exchange (NSE) as well as Central Securities Clearing System Plc. The validity period was 5 years.
Recently, the NSE released a circular on the expiration of Value Added Tax (Exemption of Commissions on Stock Exchange Transactions) Order, 2014. The Circular takes effect from 25 July 2019. Operators in the capital market will now be required to charge VAT on commissions earned and remit the amount to the relevant tax authority. That is, the Federal Inland Revenue Service.
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