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 theÂ other short term securities such as stamp duty.
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.
â€œThe 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.
â€œIn 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.
â€œTo consolidate on these gains, we are addressing some of the issues militating against the development of a vibrant sub-national and corporate bond market.|
â€œAs part of the efforts to fast track the process the acting president and commander-in-chief of the armedÂ 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.
â€œThe obvious intention is to reduce transaction costs in the bond market which would have positive multiplier effect on the economy.â€
He commended the management and staff of Afrinvest for the restructuring of the Nigeria International Debt Fund saying, â€œconverting 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 investorsâ€
Speaking on the fund, Managing Director of Afrinvest Mr. Ike Chioke, said the fund is an open ended fund which permits investorsÂ to buy the notes from the fund manager or have them redeemed by the manager at any time.
He added: â€œIt 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 perÂ note has been reduced toÂ $10 per note.The $10 Per value of the notes will accommodate a wider classÂ of potential investors who might be interested in investing in the fund.â€