Value Added Tax Exemption on Commissions from Stock Exchange Transactions Soon to Cease

The Value Added Tax (“VAT”) exemption currently enjoyed on commissions
(a) earned on the traded value of shares; (b) payable to the Securities and Exchange Commission; (c) payable to the Nigerian Stock Exchange; and
(d) payable to the Central Securities Clearing System pursuant to the Value Added Tax (Exemption of Commissions on Stock Exchange Transactions) Order of 2014 (“the Order”) will cease on 24 July 2019. 

This Order was issued by Dr Ngozi Okonjo-Iweala, the then Co-ordinating Minister for the Economy and Honourable Minister of Finance, in line with Section 38 of the Value Added Tax Act (VAT Act) which empowers the Minister to amend, vary or modify the list of exempt items contained in the First Schedule to the VAT Act.

The Order which came into effect on July 25, 2014 was slated to be in force for five (5) years from the date of commencement. The Order was aimed to increase investor activities in the Nigerian capital market as well as to stimulate economic development.


Value Added Tax (“VAT”) is a multiple stage tax with a single effect that is entirely borne by the final consumer of a good or service. The VAT charged on commissions for capital market transactions is borne by the investors. The exemption of stock exchange transactions from VAT resulted in a significant reduction in the transaction charges for investors in the capital market. The Order also reduced the compliance cost for stockbrokers who by the exemption are not required to account and remit VAT on capital market transactions. 

The effect of the expiration of the Order by July 24, 2019, barring the issuance of another order by the Minister, is that all commissions applicable to capital market transactions will be subject to VAT, and stockbrokers will be required to account and remit VAT to the Federal Inland Revenue Service. All stakeholders in the capital market are therefore advised to conduct their affairs with this impending end date in mind.

For further discussion on this topic, kindly get in touch with:

Olamide Obajimi
Senior Associate
+234-1-2702551 Ext 2633

Celestina Nwabueze

Celestina Nwabueze
+234-1-2702551 Ext 2637


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