Income Tax Returns by Operators in the Nigerian Capital Market

A Capital market is simply a part of a financial system primarily concerned with raising capital by dealing in shares, bonds, and other long-term investments. The Nigerian capital market has two (2) segments; the Primary Market and Secondary Market.

While the primary segment of the capital market is the market for fresh issue of securities by companies who need funds, the secondary market is a market for buying and selling of shares which the investors have already bought from the primary market, in which the investor is willing to dispose the part or all of his holdings to a willing buyer. All these transactions in both markets are usually done through operators in the market. Nigeria has a long list of operators in the markets (issuing houses, registrars, solicitors etc.).

For the purpose of income tax, Section 57 (1) of the Companies Income Tax Act Cap C21 LFN 2004 (as amended) provides that every company operating in a Nigerian stock exchange as a capital market operator shall, not later than seven days after the end of each calendar month, file with the Federal Inland Revenue Service (FIRS) or any other relevant tax authority, a return in the prescribed form of its transactions during the preceding calendar month. The Act also have specific provisions for the different segments in the market as thus:


Where the transactions are done in the primary market, Section 57 (2) provides that the operator should state the following in the returns to be filed:

  1. the type of offer;
  2. the services rendered;
  3. the amount of tax deducted at source; and
  4. the amount of value added tax payable;


The returns on transactions in the secondary market should contain the following:

  1. the number and value of transactions carried out during the relevant calendar month;
  2. the commission received or paid;
  3. the amount of tax deducted at source; and 
  4. the amount of value added tax payable.

It is instructive to understand that the above obligation does not preclude the operators from filing their annual income tax returns as required under the relevant income tax law.

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