NSE to resume charging VAT on commissions applicable to capital market transactions

NSE to resume charging VAT on commissions applicable to capital market transactions

The Nigerian Stock Exchange (NSE), on 10 July 2019, issued a circular on the expiration of Value Added Tax (Exemption of Commissions on Stock Exchange Transactions) Order, 2014 (the Circular).

The Circular reverses the existing incentives which exempt Value Added Tax (VAT) on all commissions applicable to capital market transactions. The Circular becomes effective on 25 July 2019, barring any further communication from the Federal Government of Nigeria (FGN) in this regard. 

It would be recalled that on 25 July 2014, FGN issued the VAT (Exemption of Commissions on Stock Exchange Transactions) Order, 2014 (“the Exemption Order”). The Exemption Order, with a 5-year validity, modified the First Schedule of the VAT Act to exempt VAT on commissions:

  • Earned on traded value of shares
  • Payable to the Securities and Exchange Commission (SEC)
  • Payable to the NSE
  • Payable to the Central Securities Clearing System Plc (CSCS)

The Exemption Order was part of FGN’s initiative to encourage investments in the Nigerian capital market. When the FGN issued the Exemption Order, the average daily value traded on the NSE was ₦5,010,000,000[1]. As at March 2019, the average daily value traded had reduced to ₦3,263,873,053[2].

Whether the Exemption Order has achieved its aim of stimulating increased transactions on the NSE remains a question that has to be answered by practitioners, particularly as there has been a drop in daily transactions in the capital market from 2014 to 2019. Nevertheless, dealing members of NSE should ensure that VAT is charged on all commissions earned and remitted to Federal Inland Revenue Service in line with the timelines provided in the law to avoid penalties for non-compliance.


[1] Nigerian stock exchange Q2 2014 fact sheet

[2] Nigerian stock exchange Q1 2019 fact sheet


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