Nigeria’s Federal Executive Council (FEC) has resolved that Value-Added Tax (VAT) on contracts signed earlier than Feb.1 remains 5 per cent and not the new 7.5 per cent.
Malam Garba Shehu, Senior Special Assistant, Media and Publicity to the President, briefed State House correspondents after FEC meeting presided over by President Muhammadu Buhari on Wednesday at the Presidential Villa, Abuja.
Shehu gave an insight on the report of cabinet committee on the effective date of the commencement of the 7.5 per cent VAT on government contracts.
“By law, the new VAT came into effect first of February; government had worried about the implication of this on contracts that had been issued earlier than this year.
“Some of the contracts that are been handled by various ministries, particularly Ministry of Works, for instance, are coming from many years back; so should the VAT on payments on such contracts be 7.5 per cent or 5 per cent as earlier signed unto.
“A final decision was reached today; and this is that new contracts that are signed from Feb.1 going forward will attract 7.5 per cent VAT.
“Contracts earlier than Feb. 1 signed on 5 per cent VAT will remain at 5 per cent; so there is no more confusion on this matter,’’ he said.
Stock market indices down by 3.35%
Sell pressure continued on the nation’s bourse on Wednesday with the market indices declining further by 3.35 per cent, amid loses in blue chips.
Sentiments remained weak in the equities market as investors sell-off of bellwether stocks dampened market performance.
Speficially, the All-Share Index dropped to 23,000 mark losing 815.91 points or 3.35 per cent to close at 23,572.75 against 24,388.66 recorded on Tuesday.
Consequently, Month-to-Date and Year-to-Date losses settled at at -10.1 per cent and -12.2 per cent, respectively.
Also, the market capitalisation shed N425 billion to close at N12.284 trillion in contrast with N12.709 trillion on Tuesday.
The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; Nestle Nigeria, Dangote Cement, Conoil, NASCON Allied Industries and Zenith Bank.
Analysts at Afrinvest Limited maintained a bearish outlook on the equities market in the next trading session.
Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., attributed the market bear-run to local and foreign factors.
Omordion said the factors were the recent crash in crude oil prices and COVID-19 which propelled corporate and sovereign debt crisis, especially among oil-dependent countries like Nigeria.
He added that the fear of a likely devaluation of naira and planned downward review of the 2020 budget to reflect the new economic realities contributed to the current market trend.
“This current market situation will not last after this panicky sell down that just hit the global and local markets, especially as the Nigerian market is trading at its four-year low in the midst of the 2020 earnings reporting season,” he said.
Market breadth closed negative with 18 gainers compared with 20 losers.
Dangote Cement and Nestle Nigeria led the losers’ chart in percentage terms, dropping by 10 per cent each to close at N153 and N915, per share respectively.
Sterling Bank followed with 9.93 per cent to close at N1.27, while Conoil declined by 9.88 per cent to close at N14.60 per share.
United Capital and NASCON depreciated by 9.83 per cent each to close at N2.11 and N10.55 per share, respectively.
Conversely, Chams and Courteville Business Solutions led the gainers’ table in percentage terms, gaining 10 per cent each to close at 22k per share, respectively.
FCMB Group followed with 9.93 per cent to close at N1.66, while Unilever appreciated by 9.91 per cent to close at N11.65 per share.
United Bank for Africa grew up by 9.73 per cent to close at N6.20, while NPF Micro Finance Bank appreciated by 9.41 per cent to close at 93k per share.
However, total volume traded appreciated by 134 per cent with an exchange of 1.39 billion shares worth N17.65 billion traded in 7,150 deals.
This was in contrast with 594.55 million shares valued at N4.21billion transacted in 4,010 deals on Tuesday.
Zenith Bank was the most traded stock accounting for 412.41 million worth N5.06 billion.
Guaranty Trust Bank followed with 385.18 million shares valued at N7.24 billion, while FBN Holdings traded 303.03 million shares worth N1.34 billion.
UBA sold 59.98 million shares valued at N370.17 million, while Wapic Insurance accounted for 30.69 million shares worth N10.12 million.
