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FG approves waivers for VAT, Stamp Duties

By Peter Egwuatu
In its determination to attract investment in the capital market, the Federal Government has approved waivers for the Value Added Tax (VAT) and the request for the slash in the  other short term securities such as stamp duty.

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Minister of Finance, Dr Mansur Muhtar, disclosed this yesterday in Abuja while launching the restructured Nigeria International Debt Fund (NIDF) and the 2010 Nigerian Bond Market Report by Afrinvest Limited

According to him, this is to enhance the growth of the economy as the tax waivers would have positive multiplier effects on the overall economy.

“The recent global economic and financial crisis further reinforces the need to nurture a strong and vibrant domestic bond market as a viable alternative source of providing long-term finance to fund the growth and development.

“In 2009 significant progress was made as sub-nationals and corporate entities issued debt securities in the bond market .This is without doubt a healthy development hat would help deepen the domestic bond market and reduce the dominance of Federal Government of Nigeria (FGN) bonds in the market.

“To consolidate on these gains, we are addressing some of the issues militating against the development of a vibrant sub-national and corporate bond market.|

“As part of the efforts to fast track the process the acting president and commander-in-chief of the armed  forces has approved the extension of tax waivers on sub-nationals and corporate bonds already approved under the companies income tax Act(CITA) to include the personal Income Tax Act (PITA) Value Added Tax(VAT) Capital Gains Tax(CGT) and short term federal government securities as well as a request for a reduction in stamp duties for re-issues of debentures.

“The obvious intention is to reduce transaction costs in the bond market which would have positive multiplier effect on the economy.”

He commended the management and staff of Afrinvest for the restructuring of the Nigeria International Debt Fund saying, “converting the fund to Naira denominated Fund demonstrates confidence in our economy.

The reduction of the par value of the notes from US$100 to US $10 and the decision to make the fund open-ended will undoubtedly make the fund accessible to a wider base of investors as well as increase liquidity and flexibility options for investors”

Speaking on the fund, Managing Director of Afrinvest Mr. Ike Chioke, said the fund is an open ended fund which permits investors  to buy the notes from the fund manager or have them redeemed by the manager at any time.

He added: “It was observed that the initial $100 pricing of the notes (then units) of the NIDF inadvertently restricted the classes of investors in the NIDF to institutions and high net individuals only. In order to allow retail investors participate in the fund , the par value of the fund which was originally $100 per  note has been reduced to  $10 per note.The $10 Per value of the notes will accommodate a wider class  of potential investors who might be interested in investing in the fund.”


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