The Securities and Exchange Commission (SEC) has urged the Federal Government to consider its proposal to exempt corporate bonds from the payment of tax.
The commission said tax exemption would help to unlock the attractiveness of the corporate bond market to boost market liquidity.
SEC’s Director General Lamido Yuguda said this at a media briefing on the outcome of the second Capital Market Committee meeting for the year.
The Federal Government had, in 2012, exempted bonds and short-term government securities from income tax for 10 years, which expired on January 1, 2022.
According to a statement by SEC’s Head of Corporate Communications, Efe Ebelo, the commission’s DG said: “The Nigerian Capital Market community held its second Capital Market Committee (CMC) meeting for the year on Thursday, August 18, 2022. The meeting was well attended by over 300 capital market operators and we had very robust deliberations.
“We observed that the world is facing high inflation and low growth. Consequently, the World Bank, the International Monetary Fund (IMF) and other economic forecasters are trimming down growth estimates with forecasts reflecting sizable downgrades to the outlook for the rest of the year and 2023…”
“The commission continues its engagement with the Minister of Finance, Budget and National Planning on the request for tax exemption for corporate bonds.”
He added: “For any asset class, the investment is a function of many considerations. Tax is just one of those considerations. Although it is only one, it is an important consideration, especially when the tax rate is high.
“So, I think for now, given that there are so many considerations, and considering all these factors, we feel the tax rebate should be reinstated and we have been working with the tax and fiscal authorities to advocate the return to the status quo.”
The SEC DG also said the revised Capital Market Master Plan would be launched in November, following its approval by the Federal Government.