Capital market operators on Tuesday urged the new Federal Inland Revenue Service (FIRS) Chairman, Muhammad Nami to ensure the removal of Value Added Tax on capital market transactions to boost investment in the country.
The operators said this while reacting to the appointment of Nami as the new FIRS chairman.
The operators said that VAT on capital market investments as well as withholding tax on dividends were discouraging investors from the market.
Nami was appointed by President Muhammadu Buhari to replace Mr. Tunde Fowler, whose tenure expired on Dec. 9.
Mr. Sola Oni, a chartered stockbroker and Chief Executive Officer, Sofunix Investment and Communications, said that Nami must collaborate with market regulators and operators on taxes discouraging people from investment.
“In our capital market, the issue of tax has always been a disincentive to investment.
“For instance, withholding tax on the dividend which has become a thing of the past in many markets has suddenly found its way back. Besides, VAT has raised dust several times.”
The challenge is that taxes increase the cost of the transaction. This is at variance with global best practices,’’ he said.
According to him, tax matter in Nigeria has always been a subject of controversy and not equitable: “Those who believe that they benefit nothing from the government are always the people that carry the burden.
“The belief is that the very few that control the bulk of economic activities are the tax evaders.
“It is, therefore, not surprising that most micro-enterprises are always at the mercy of tax authorities whereas they are benefiting nothing in terms of infrastructure.
“In advanced countries, nobody wants to evade tax because infrastructure is provided by the government to create a robust enabling environment for businesses too,’’ Oni said.
Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., called for the removal of VAT on capital market transactions.
Kurfi said that the new chairman should harmonise various taxes in the country for easy administration and better returns.
He urged Nami to map out strategies that would raise the country’s contribution of tax revenue to Gross Domestic Product (GDP).
Also speaking, Mr. Moses Igburde, the Publicity Secretary, Independent Shareholders Association of Nigeria (ISAN), urged the new FIRS boss to learn from the mistakes of Fowler.
Igburde said that the new chairman should address issues of multiple taxation and gangster way of collecting taxes from taxpayers. According to him, FIRS should engage the companies and other taxpayers rather than adopting a gangster approach.
“FIRS must leverage on technology and modern infrastructure to collect and monitor tax collections,’’ he added. Igburde charged FIRS to introduce friendly tax policies that would encourage companies to pay their taxes willingly.