By a Public Notice issued few days ago, the FIRS explained various parts of the administration of Stamp Duties in Nigeria. Specifically, the FIRS made clarifications on:
- the recent amendment to the Stamp Duties Act by the Finance Act;
- transactions liable to Stamp Duties and their rates;
- the administration of Stamp Duties in Nigeria;
- Stamp duties on Bank deposits and transfers;
- Stamp Duties on Receipts;
- remittance of Stamp duties;
- the burden of payment of Stamp Duties;
- FIRS Adhesive Stamp and NIPOS Postage Stamp; and
- stamp duty penalties and interests.
The FIRS’ take on these are set out below.
On the first point, the FIRS clarified that the most recent amendment to the Stamp Duties Act by the Finance Act recognised technology, e-commerce and cross border transactions in line with global practice and current economic realities.
Table of Duties
The FIRS also set up a table for us and served us various transactions/instruments liable to Stamp Duties and their applicable rates. The dutiable transactions served are arranged below for you to take away.
Thirdly, FIRS maintained that it is the only competent authority to impose, charge and collect duties upon instruments that relate to instruments executed between a Company and any person while the relevant State tax authority charges and collects stamp duties in respect of instruments executed between individuals.
Electronic Bank Payments
The FIRS also insists that a one-off duty of ₦50 will apply on all bank deposits and transfers from ₦10,000 and above. Banks have the obligation to deduct and remit the stamp duties due on such transactions.
On the Receipts point, it was clarified that a fixed rate of ₦50 FIRS adhesive stamp will apply in respect of all receipts.
Electronic Bank Payments II
Banks are required to remit all stamp duties collected into the FIRS Stamp Duties Account (FIRSSDA) with the Central Bank of Nigeria. To clear any doubts the FIRS emphasized that all stamp duties on all electronic deposits and transfers – even those between individuals alone, are to be remitted into the FIRS Stamp Duties Account only. The reason given for this is that the FIRSSDA and the revenue in it would be distributed monthly to the three tiers of government in Nigeria.
The FIRS also clarified that the beneficiaries of a contract or the paying party in a transaction are to bear the burden of paying Stamp Duties. The party receiving payment in a transaction, Banks, Ministries, Departments and Agencies of government, Landlords, etc are only agents of collection and must remit stamp duties collected accordingly.
The FIRS educated the public that the NIPOST postage stamp is administered by NIPOST for delivery of items and documents and does not denote duty. The NIPOST stamp is not a substitute for FIRS adhesive stamp which is solely for Stamp Duty payment.
Lastly, the FIRS promised to visit penalties and interest on those who fail to collect or remit Stamp Duties in accordance with the law.
Though the FIRS position in this Circular agrees to a large extent with the Stamp Duties Act (as amended), we see issues arising from the clarifications provided by FIRS on Electronic Bank Payment.
We have already pointed out that the FIRS in its last Public Notice seems to have conveniently ignored the proviso in Section 89(3) of the Stamp Duties Act as amended that exempts moneys paid into an account by the owner of the account (inter-bank or intra bank) from the one-off duty of ₦50. The FIRS still insists in this Public Notice that all bank deposits and transfers should be liable to Stamp Duty. This remains contrary to the provisions of the Stamp Duties Act.
Also, the law expressly separates collection of Stamp Duties by the FIRS and the State Tax Authorities. The FIRS however states in this Public Notice that all moneys collected by Banks on all electronic transfers deposits and transfers – even those between individuals alone (which should ordinarily go to the State Tax Authorities), are to be remitted into the FIRS Stamp Duties Account ONLY.
This blatantly negates the separation of the authority to collect granted in Section 4 of the Stamp Duties Act as amended. It is ludicrous to imagine that state tax authorities would collect Stamp Duties due to the FIRS. In similar vein, the FIRS ought not collect Stamp Duties due to the State especially where these collections are to be put into a Federation Account for sharing among all tiers of government. It however remains to be seen if this stance taken by the FIRS would be challenged.
You would have wondered the sudden prominence of Stamp Duties in this Nigeria. The government is set to reposition stamp duties and make it the next major source of revenue for Nigeria due to the fall of the demand and price of oil and gas which as you well know has been the dominant source of income for the Nigeria.
Taxpayers are enjoined to conduct their affairs in accordance with the provisions of the Stamp Duties Act to prevent accumulation of penalties and interest as promised by the FIRS.