Stamp duties are essentially taxes levied on financial
transactions and documents. Also called instruments for the purpose
of the Stamp Duties Act, they’re paid to the Federal Government of
Nigeria (FGN) or State Government on documents, including bills of
exchange, conveyances on sale, promissory notes and agreements.
Others are contracts or documents, like instruments of
apprenticeship, letters and certificates of admission, insurance
policies, and others. Apart from these, you’re also required to pay
stamp duty when sending out documents via the post office.
It’s administered by the Federal Inland Revenue Service (FIRS),
the Federal Capital Territory (FCT), and respective States Internal
Revenue Services (SIRS).
Stamp duty payment derives backing from legislation, with the
law referred to as the Stamp Duties Act 1939. That’s as amended by
various Acts and different resolutions that are obsolete amid
present realities.
A newer bill, Stamp Duties (Amendment) Bill 2018, got passed
into law in May 2018 to amend the Stamp Duties Act LFN 2004.
The stamp duty used to be ₦50 charge over all bank transactions
over ₦1,000. It was recently reviewed in FG’s latest finance
bill that was put into effect earlier in the year.
With that revision, customers are now required to pay the ₦50
stamp duty only if their fund transfers or deposits are above
₦10,000. This charge is mandated by the Finance Act of 2019, with
the revenue remitted to FG.
Let’s discuss stamp duties in Nigeria.
Table of Contents
Stamp Duties Act
As earlier stated above, the payment of stamp duties has legal
backing, which is the Stamp Duties Act 1939 (as amended by many
Acts and resolutions). Due to the current realities, this has now
become outdated.
In the Act, a list of documents has been specified in its
Schedule, in addition to the duty to be paid on each document.
There is a newer bill, which is called Stamp Duties (Amendment)
Bill 2018, passed into law in May 2018 by the eighth National
Assembly. It seeks to completely amend the Stamp Duties Act LFN
2004 (that has got outmoded judging by current realities).
This bill comprises (twenty-three) 23 amendments to the extant
provisions of the Stamp Duties Act (“SDA”), Cap S8, Laws of the
Federation of Nigeria 2004.
When stamp duty was reviewed, the new stamp duty charge is
mandated by the Finance Act of 2019.
Importance of Stamp Duties
When the FG announced the collection of stamp duty of ₦50 charge
over bank transactions that exceed ₦10,000, a lot of Nigerians
wondered why the government took that decision. The move was made
to handle the inadequacies occasioned by the falling prices of
petroleum globally.
Considering the fact that petroleum is the mainstay of the
Nigerian economy, it’s understandable that the government plans to
use stamp duty revenue to raise substantial income to continue its
myriads of programs.
The finance bill, which backs the new stamp duty, is a plan by
FG to revamp tax administration in Nigeria through the introduction
of different tax increments.
Revenue from stamp duty is collected by the FGN through the
CBN.
How Stamp Duties are Calculated
Every receipt, regardless of whether it’s cash or electronic
transfers of ₦1000 and above into a current account, qualifies to
be charged and will be charged a stamp duty of ₦50.
Also, the ₦50 Stamp Duty gets charged for each transaction more
than ₦1000 and above. It isn’t charged per volume of your banking
transaction.
Furthermore, the Stamp Duty is also deducted from POS receipts,
ATM print-outs, fiscalised device receipts.
Stamp Duty Charge Exemptions
The new bill exempts bank transfers that are between 2 accounts
owned by the same individual, company, or organization from stamp
duty charges.
You can see your bank’s customer service (CS) for a charge
reversal. If your bank fails to do this reversal, you can send an
email via cpd@cbn.gov.ng to the consumer protection department of
the CBN to resolve this issue.
Forms of Stamp Duties
The forms or types of stamp duties are
- Fixed Duties: These don’t change based on consideration.
Examples of fixed duties include duties on payment receipts,
guarantor forms, proxy forms, and others. - Ad-valorem: These are duties varying with consideration, such
as duties on Deed of Assignment, Share Capital, Bills of Exchange,
Debenture, and others.
Stamp Duties on House Rent and C of O Transactions
In a bid to mitigate against disagreements in real
estate-related deals and generate more revenue for the government,
the FIRS has announced stamp duty payment will be made on house
rent as well as the Certificate of Occupancy (also called C of O).
This is in accordance with its new adhesive duty.
The disclosure was made by Mr. Abdullahi Ahmad in a press
statement earlier this month in Abuja. (Ahmad is the FIRS Director
for Communication and Liaison Department.)
This new policy — he said — was formulated to provide the tools
the legal backing needed and ensure that they’re legally binding on
every individual taking part in such deals.
As a result of this, Ahmad told Nigerians to make sure documents
relating to rent and lease agreements for their homes or offices, C
of O, and other typical tools for business-related transactions
were verified using the new FIRS Adhesive Stamp Duty.
“The following are the chargeable transactions in the Fixed
Duty Instruments category, Power of Attorney (PoA), Certificate of
Occupancy (C of O), Proxy form; Appointment of Receiver, Memorandum
of Understanding (MoU), Joint Venture Agreements (JVA), Guarantor’s
Form, and Ordinary Agreements Receipts.“
“While ad-Valorem Instruments chargeable under the Stamp
Duties Act are Deed of Assignment, Sales Agreement, Legal Mortgage
or Debentures, Tenancy or Lease Agreement, Insurance Policies,
Contract Agreements, Vending Agreement, Promissory Notes,
Charter-Party and Contract Notes,” Ahmed explained[1].
Summary
Stamp Duties, which are also referred to as instruments for the
Stamp Duties Act, are taxes levied on financial transactions and
documents. They’re paid to the government (either at the federal or
state level) on documents, such as bills of exchange, agreements,
conveyances on sale, instruments of apprenticeship, letters and
certificates of admission, insurance policies, etc. Also, a stamp
duty of ₦50 is charged over all bank transactions exceeding ₦10,000
via the CBN, unlike the previous policy where the duty applied to
transactions over ₦1,000.