From ISAAC ANUMIHE, Abuja
As part of efforts to revive the comatose capital market, the Federal Government has decided to forgive N22.6 billion margin loans by 84 stockbrokers, as well as cancel the payment of stamp duties and Value Added Value Tax (VAT) on stock market transaction fees. Making this clarification, yesterday, in Abuja, the Co-ordinating Minister for the Economy and the Minister of Finance, Dr Ngozi Okonjo-Iweala, noted that the market, particularly the stock exchange had been very slow in the aftermath of the global financial meltdown, with the All- Share -Index plummeting from 66,000 points in March 2008 to 22,000 points by January 2009.
According to the Minister, a vibrant capital market was essential to government’s Economic Transformation Agenda, particularly, in terms of raising long term capital for financing critical infrastructure. She disclosed that the Government set-up a committee headed by the Central Bank of Nigeria (CBN)’s Deputy Governor, Dr Kingsley Moghalu, to make recommendations on measures to resuscitate the capital market. However, the minister said the committee had come up with two measures aimed at resuscitating the capital market. S
uch measures include, a forbearance of about N22.6 billion on the margin loans of 84 stockbrokers, in accordance with Section 6 (5) of the Assets Management Corporation of Nigeria (AMCON) Act, adding that AMCON had purchased these margin loans from banks for about N42.6 billion while the value of the underlying assets today is worth only N19.96 billion. “In furtherance of AMCON’s clean up of the banking sector, it is necessary to wipe off the debt overhang in the capital market as this is dampening market activity,” the minister said. The second measure, according to her, is the elimination of stamp duties and VAT on stock market transaction fees. The minister also noted that taxes on stock exchange transactions fees were as high as 12 per cent and which constituted a major disincentive to invest in the Nigerian capital market.
To this effect, she said, the government has waived the 0.075 per cent stamp duties payable on stock exchange transaction fees and exempt from VAT, commissions, i.e. those earned on traded values of shares, payable to the Nigerian Stock Exchange (NSE), payable to Securities and Exchange Commission (SEC) by including these commissions in the list of VAT-exempt goods and services. The two measures notwithstanding, Okonjo-Iweala said the 84 benefiting stockbrokers would not be allowed to provide any profession