Addition of 7.5% VAT to capital market transactions is disincentive – Kurfi

The introduction of Value Added Tax (VAT) of 7.5 per cent to the capital  market transactions from the position of zero vat by the end of June this year, has been said to have negative impact on the nation’s capital market.

The Chief Executive Officer of the APT Securities and Funds Limited, Alhaji Kasimu Kurfi made the observation in an interview with Business247 news Online in Lagos.

“The increase of VAT from 5 per cent to 7.5 per cent, will lead to increase in the cost of market activities, simple.

“Prior to June this year, there was a relief from VAT payment on capital market transactions over the past five years that was during the time of Ngozi Okonjo-Iweala as minister of finance.

“We sought the president weaver for a period of five years. During this period, there was no VAT on capital market transactions.

“This ended 21 June, 2019 and now every transaction you have to pay VAT. The VAT you are paying now is not 5 per cent but now 7.5 per cent.

“It is an additional cost to the investors, from free not only to 5 per cent now to 7.5 per cent. This will have negative effect on the market because most of the foreign investors look at the cost of transactions.

“They are always bothered on what does it cost them to play in the Nigeria market. Already we have brokerage fees which is about 1.35%, we have SEC fee which is 0.35%; NSE, 0.3% then CSCs 0.3% stamp duty 00.75% plus 7.5% VAT now.

“This means if you are buying, you are to pay about 1.24 per cent or 1.67 per cent for buyer for seller you are going to pay 2.035 per cent or 2.07 per cent and that is deeply affecting poor investor in the market and invariably discouraging from investing in the market”.

Kurfi is of the view that rather than increase the cost of transactions in the market, government should find ways of reducing the cost of transactions in the market by making it to be attractive to all categories of investors.