Multiple tax, disincentive to capital market investors — Deliotte executive

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By Nkiruka Nnorom

Tax, Anambra, VAT

Tax

MORE investments would flow into the capital market if transaction cost and multiple tax in the Nigerian capital market are reduced or eliminated.

Taiwo Okunade, Partner, Financial Service Industry Group at Deloitte Tax Function, stated this at the sixth Triennial Delegates’ Conference of the Independent Shareholders’ Association of Nigeria, ISAN, in Lagos. He said that multiple tax and Value Added Tax, VAT, on commission were big disincentives for a lot of investors.

Delivering a lecture entitled, ‘The Role of Taxation in Developing the Nigerian Capital Market’, he noted that Nigeria was lagging behind in the ease of paying taxes, noting that the government has not made it easy for companies and individual tax payer in the country to honour their tax obligations.

Discouraging investments

Okunade explained that multiple tax audits as well as transaction cost may discourage investment in risky assets even when the expected returns on such investments exceeded those of investments with less variance in possible outcomes.

He said: “For the government to encourage investment in the capital market, then transaction cost should be as low as possible because you do not want to know that at the point of putting your money in an investment, your money might be reduced by 10 per cent that will be charged to you at that point.

“Also, the government can reduce transaction cost by eliminating VAT completely on commission and fees that an investor will have to pay stockbrokers when they are investing their money.

“The other thing is elimination of multiple tax audits. There has got to be harmonisation of audits under the umbrella of the Joint Task Force to conduct a single audit instead of different agencies doing different tax audits.”

He urged the government to come up with a mechanism for collaboration between the federal and the state governments to reduce multiple tax audits on tax payers.

Adeniyi Adebisi, National Coordinator, ISAN, speaking at the event, said that a strong and efficient capital market was the one that commanded the confidence and respect of investors, adding that good legislation, astuteness of the regulators and observance of high integrity on part of the Nigerian Stock Exchange (NSE) would guarantee the expectation.

He said that corporate managers worked generally against the background of successive government’s policies, noting that where the policies are good, steady, and well implemented, managers worked better and achieved more.

Vanguard

Source:

https://www.vanguardngr.com/2019/12/multiple-tax-disincentive-to-capital-market-investors-deliotte-executive/

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