How to Configure VAT on InfoWARE
VAT EXEMPTION ON COMMISSIONS FROM STOCK EXCHANGE TRANSACTIONS ARE SOON TO CEASE. IT’S EASY TO CONFIGURE ON InfoWARE
The Order of 2014 (“the Order”) that came into effect on the 25th of July, 2014 brought about the exemption of Value Added Tax (VAT) currently enjoyed on commissions earned on traded value of shares; payable to Securities and Exchange Commission; payable to the Nigerian Stock Exchange; and payable to the Central Securities Clearing. The Order was aimed at increasing investor activities in the Nigerian capital market, as well as to stimulate economic development.
Value Added Tax (VAT) is a multiple-stage tax with a single effect that is entirely borne by the final consumer of a good or service. The VAT charged on commissions for capital market transactions is borne by the investors. The exemption of stock exchange transactions from VAT resulted in a significant reduction in the transaction charges for investors in the capital market. The Order also reduced the compliance cost for stockbrokers who by the exemption are not required to account and remit VAT on capital market transactions.
After 5 years of existence, Effective on the 25th of July, 2019, the expiration of “the Order” will commence barring the issuance of another order by the Minister, is that all commissions applicable to capital market transactions will be subjected to VAT, and stockbrokers will be required to account and remit VAT to the Federal Inland Revenue Service. All stakeholders in the capital market are therefore advised to conduct their affairs with this impending end date in mind.
As your software vendor, InfoWARE has imbedded the automation of VAT deductions and supports it seamlessly. These deductions will be effective on all commissions applicable to capital market transactions.
Click here to Download manual to Charge VAT using InfoWARE.