Title: VAT exemption and capital market transactions

Authors: Jerry Danjuma Kwarbai; Samuel Adebayo Olaoye; Dasauki Caleb Musa

Addresses: Department of Accounting, Babcock University, Nigeria ' Department of Accounting, Babcock University, Nigeria ' Department of Economics, Babcock University, Nigeria

Abstract: In this paper, we modelled the impact of VAT exemption policy on capital market transactions using the Garch model. We implored the use of Garch 1.1 and Assymetric T-Garch model to examine the effect of the introduction of the VAT policy on the Nigerian stock exchange activities. The result of the study suggests that the implementation of VAT exemption has caused volatility in the volume of shared traded by informed and uninformed investors, also the policy has moderately impacted on the volume of transactions. The study recommends that government should evaluate the period of the VAT exemption policy from 2014 to the year of re-introduction of value added tax charges on transactions for proper alignment and possible re-introduction of the VAT exemption.

Keywords: value added tax; VAT; capital market; taxation; tax incentive; tax system.

DOI: 10.1504/AJFA.2020.110327

American Journal of Finance and Accounting, 2020 Vol.6 No.2, pp.190 - 200

Received: 30 Mar 2020
Accepted: 04 Jun 2020

Published online: 14 Oct 2020 *

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