The non-passage of Petroleum Industry Bill (PIB), Companies and Allied Matters Act (CAMA) bill and the Investment and Securities Act (ISA) bill by the National Assembly may hinder the effectiveness of the recently passed Finance Act.
This, among others, formed part of the views of participants at the Securities and Exchange Commission (SEC) yearly budget seminar held in Lagos yesterday.
However, they agreed that the Finance Act is the most significant finance policy of the government since 1999 and has addressed various issues in about 100 amendments such as securities lending, Real Estate Investment Trusts (REITs), stamp duties and removal of taxation from holding companies.
They, nonetheless, said that a number of legislations are still required to support its effectiveness and functionality.
The participants, therefore, recommended reduction in the rate of Companies Income Tax from 30 percent and removal of withholding tax from dividends, saying that they still serve as disincentives to both direct and portfolio investment in the country.
“Effectively, shareholders in Nigeria are subjected to numerous taxes whereby the effective tax rate on investors is among the highest globally. A reduction in the effective tax rate on equity investments and further, corporate tax rates is necessary to make Nigeria more competitive in attracting capital.
“Reduction of capital losses against profits may be canvassed as part of exemptions in the Companies Income Tax Act and Personal Income Tax Act,” they said in a communique at the end of the seminar.
They also recommended the provision of conducive business environment and credit enhancements for the Small and Medium Scale Enterprises (SMEs) to thrive as well as need for a specific framework on Public Private partnership (PPP ) and concessions in order to address infrastructure financing.
According to the Communiqué, “there is need to create more hedging opportunities in the Nigerian capital market, as this have implication for market liquidity and efficiency;
“The government needs to work towards encouraging the participation of the private sector in the Nigerian business environment. The power and agricultural sectors are key sectors where in-depth reform and partnership with the private sector are important. There should be partnership with the private sector to mobilize domestic resources, create quality jobs and lift people out of poverty.”
In her opening address, Ms. Mary Uduk, Acting Director General, SEC, emphasised the important role that budgets play in an economy, and by extension in the capital market.
“Over the years, the SEC Budget Seminar Series has served as a forum for evaluating the connection between the Nigerian capital market and the annual federal government budget with the aim of identifying how the capital market can contribute to, and benefit from, the budget and its implementation,” she said.
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