Applicable Transaction Charges

Charges while trading in stocks come from basically government taxes and stockbroker commissions.

Charges while trading in stocks come basically from government taxes and stockbroker commissions. While the government fixes tax rates on profits made, stockbrokers decide their commission charges (technically called brokerage) as regulated by the Securities and Exchange Commission (SEC).

Here’s an overview of the charges applicable in trading and buying 

Broker’s commission:     1.350% (when buying),    1.350% (when selling)
CSCS transaction fee:     Nil (when buying),    0.300% (when selling)
CSCS trade alert:     Nil (when buying), Nil (when selling)
NSE fee:     Nil (when buying), 0.300% (when selling)
SEC fee:     0.300%    (when buying), Nil (when selling)
Stamp duties:     0.075% (when buying),    0.075% (when selling)

Total:     1.725% (when buying),    2.025% (when selling)

Note that this total figure can go up to a maximum of 1.855% (when buying) and 2.400% (when selling) when VAT is included.

There is a withholding tax (WHT) of 10% which is applicable to dividend payments in Nigeria. The tax is deducted by the investee company before remittance of dividends to shareholders.

Interest earned from bond investments are also liable to a WHT at 10% and the WHT is also the final tax, if the only source of income from Nigeria is interest. However, there is currently an exemption from income tax on all bond interest via the Exemption of Bonds and Short Term Government Securities Order of 2011. The exemption is for a period of 10 years, ending in the year 2021. All issuers paying bond interest during this period will therefore not deduct any WHT.

As income taxes are payable on taxable profit, increase in share value does not qualify as taxable profit, hence no additional tax is payable. Dividend from investing in foreign equities (listed on the NSE) are tax free in Nigeria.