Corporate bonds

SEC calls for tax exemption on corporate bonds to boost market liquidity | The Guardian Nigeria News

• To unveil revised capital market master plan next month

The Securities and Exchange Commission (SEC) has urged the federal government to consider its proposal to exempt corporate bonds from paying tax.

SEC Chief Executive Lamido Yuguda said this over the weekend during a media conference on the results of the second capital market committee meeting for the year 2022.

The federal government had, in 2012, exempted bonds and short-term government securities from income tax for 10 years, which recently expired on January 1, 2022.

Speaking on the corporate bond tax, the SEC CEO said the move to seek tax exemption would help unlock the attractiveness of the corporate bond market.

He said: “We have observed that the world is facing high inflation and low growth. Consequently, the World Bank, International Monetary Fund and other economic forecasters are cutting growth estimates, with forecasts reflecting significant downgrades to the outlook for the rest of the year and 2023.

“The Commission is continuing its dialogue with the Minister of Finance, Budget and National Planning on the request for tax exemption of corporate bonds.

“For any asset class, investing is a function of many considerations. Taxation is just one of those considerations, even if it’s only one, it’s an important consideration, especially when the tax rate is high.

“So I think at this point, given that there are so many considerations, and taking into account all of these factors, we believe that the tax refund should be reinstated and we have worked with the tax authorities and taxes to advocate a return to the status quo.”

The SEC CEO also said that the revised capital market master plan would be launched by November after approval by the federal government.

The Capital Market Master Plan Implementation Board had in June this year submitted the revised Nigerian Capital Market Master Plan (2021-2025) to the Minister of Finance, Budget and National Planning.

Yuguda assured that despite the difficult operating environment, the Commission will continue to strive and fulfill its mandate of protecting investors and creating an enabling environment for market operations.

The SEC boss urged all stakeholders to continue working to reduce the volume of unclaimed dividends and reiterated that severe sanctions will be imposed on any stakeholder whose action appears to thwart the Commission’s efforts on this objective .

He lamented that despite the commission’s efforts in implementing the electronic dividend warrant management system, investors continued to complain about the delays in electronic dividend payments and cumbersome manual process, among other shortcomings.