Mixed reactions trail 0.08% stamp duty on NSE

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The Nigerian Stock Exchange (NSE) on Thursday announced that the revised Stamp Duty on securities transactions to 0.08 per cent from 0.075 per cent, will take effect from Dec. 7.

According to the notice, the change is necessitated by the classification of Contract Notes as an ad valorem tax by the Federal Inland Revenue Service (FIRS).

The notice read in part: “As a responsive self-regulatory organisation, the NSE is committed to enforcing rules and ensuring compliance with regulations and other applicable government requirements.

“While it had maintained a stamp duty rate of 0.075 per cent in line with what was obtainable in the Nigerian capital market, it is imperative that the FIRS’ stamp duty regime of 0.08 per cent on securities transactions is applied.

“To this end, the Central Securities Clearing System Plc (CSCS) will adjust its system to implement the automated deduction of the Stamp Duty rate of 0.08 per cent from Monday, Dec. 7.

“The Exchange has also issued the requisite guidance to Dealing Member Firms to put in place the necessary measures to ensure compliance and communicate this change to investors in a timely manner.

“Capital market stakeholders requiring further information can refer to the market circular issued by the Exchange on 17 November captioned ‘Administration of Stamp Duty on Securities Transactions’, which can be accessed on NSE’s website.

“Investors are also advised to contact their respective stockbrokers for more information or clarification,” it read.

Analysts who spoke with Nigerian NewsDirect had different reactions over the new revised Stamp Duty on securities transactions to 0.08 per cent.

A Financial Economist and Professor of Capital Market at the Nasarawa State University Keffi, Uche Uwaleke, said, “I don’t think the increase will have any significant impact on cost of transactions on the NSE in view of the small size of the adjustment.”

The Head, Investment Research & Business Development, PanAfrican Capital Holdings Ltd, Moses Ojo said, “The upward review of stamp duty rate by the NSE will definitely increase the transaction cost on the Exchange.

“By implication, investors will pay more on their buy and sell transaction compared to what they were paying before the review.

“This move may not lead a disincentive to investment in the capital market in the medium to long term because the rate of increase is not significant.”

The Chief Executive Officer, APT Securities Limited, Mr. Kasimu Garba Kurfi, said, “It was FIRS that called the attention of Exchange that the correct rate for stamp duty is 0.08 per cent not 0.075 per cent as earlier charged .

“It is a marginal cost to the transaction cost that may have little effect to the capital market.”

In addition, the Executive Vice Chairman, Highcap Securities, Mr. David Adonri said, “ I think the directive to round up the figure came from FIRS. The NSE only conveyed the information to market operators. It is a debit borne by the investors and also marginally increase cost of transaction.”