A BRIEF ON STAMP DUTIES AT THE INAUGURATION OF THE INTER-MINISTERIAL COMMITTEE ON THE AUDIT & RECOVERY OF STAMP DUTIES AND LAUNCH OF FIRS ADHESIVE STAMP
Nami, Executive Chairman
Federal Inland Revenue Service
His Excellency, the President of the Federal Republic of Nigeria, ably represented by the Secretary to the Government of the Federation
His Excellency, the President of the Senate
His Excellency, Speaker, House of Representatives
The Honourable Attorney General of the Federation & Minister of Justice
The Honourable Minister of Finance, Budget and National Planning
Members of the National Assembly
Board Members, Federal Inland Revenue Service
Ladies and Gentlemen
It is my honour and privilege to make this presentation at this auspicious occasion, which brings together important stakeholders in the public and private sectors to deliberate on the audit and recovery of stamp duties and launch of the Federal Inland Revenue Service (FIRS) adhesive stamps.
I sincerely thank all our stakeholders and partners for being a part of this epoch making event.
The existence of Stamp Duty in Nigeria predates independence going by the 1st commencement date of 1st April 1939. (i.e. Ordinance 41 of 1939 and subsequent amendments).
Stamp Duties administration is governed by the Stamp Duties Act, CAP S8, LFN 2004 (as amended).
As the manner of business transactions continues to evolve and change pattern, so also the law on Stamp Duties. The Stamp Duties Act has therefore undergone several amendments over the years up to the Finance Act of 2019. The most recent amendment recognizes technology, economic realities, e-commerce and cross border transactions.
Stamp Duty is essentially a duty chargeable on both physical and electronic instruments. The Stamp Duties Act defines duty to mean “any stamp duty for the time being chargeable under any other Act and also includes any fee chargeable hereunder“.
The stamp is used to denote a dutiable instrument either electronically, use of an adhesive stamp or inked with a block die in acknowledgement for duty paid.
Section 2 of the Stamp Duties Act defined “stamp” as “an impressed pattern or mark by means of an engraved or inked block die as an adhesive stamp or an electronic stamp or an electronic acknowledgement for denoting any duty or fee“.
Furthermore, as the world becomes more global, COVID 19 has further limited physical interactions, electronic payments acknowledgement of duties at a time like this is a must.
2019 Amendments to the Stamp Duties Act
The Finance Act 2019 (Sections 52-56) amendment to the Stamp Duties Act has clearly defined responsibilities for the administration of Stamp duties in Nigeria and jurisdiction of participating taxing authorities. The FA 2019 Act has laid to rest;
- ambiguities as to parties responsible for “the imposition of stamp duty”;
- With Finance Act, 2019, FIRS is the sole competent tax authority to assess, collect and account for stamp duty in Nigeria.
- definition of stamp duty to mean an evidence or acknowledgement of the payment of the appropriate fee, and
- the fact that a stamp duty could take the form of an engraved, inked block die, an electronic Stamp or an electronic acknowledgement for denoting any duty or fee.
The Schedule to the Stamp Duties Act contains a list of dutiable and exempted items. The dutiable items have been expanded under the FA 2019 to include electronic receipt or electronic transfer for money deposited in any bank; It further makes an upward review of duty from N4.00 to N50.00 on receipts or transfer between MDBs customers relating to N10,000 and above per transaction.
|Fixed Duty Instruments:||Ad-Valorem Instruments:|
|Power of Attorney (PoA)||Deed of Assignment|
|Certificates of Occupancy (C of O)||Sales Agreement|
|Proxy forms Appointment of Receiver||Legal Mortgage or Debentures Tenancy or Lease Agreements|
|Memorandum of Understanding (MoU)||Insurance Policies|
|Joint Venture Agreements (JVA)||Contract Agreements|
|Guarantor’s form||Vending Agreement|
|Ordinary Agreements Receipts||Promissory Notes Charter-Party Contract Notes|
Stamp Duty Administration
Stamp duties is basically charged in two forms, either ad valorem; where duty payable is a percentage of the consideration on an instrument or a fixed sum irrespective of the consideration on dutiable instrument or document.
The Stamp Duty Commissioner is appointed by the relevant tax authority (either Federal or State) as prescribed by jurisdictional authority to administer the Act.
His/her functions are to administer the provision of the Act and to supervise the Stamp Duties office; adjudicating/assessment, stamping, imposition of penalties where necessary, ensuring the security of stamped instruments, and accounting for duties collected.
Relevant Taxing Authority
The Federal Inland Revenue Service, by section 4(1) of the Stamp Duties Act, is the only competent authority to impose, charge and collect Stamp Duties upon instruments specified in the Schedule of the Stamp duties Act where such duties relate to matters between a company and an individual, group or body of individuals.
The relevant tax authority in a State, by section 4(2) of the Stamp Duties Act, is empowered to collect Stamp duties on instruments executed by individuals at such rate as may be determined by the Act.
Previously, the FIRS collected Stamp duties on instruments executed by an individual resident in the Federal Capital Territory. However, this has ceased upon the creation of the FCT-Internal Revenue Service.
Review of Stamp Duties Collection Performance
- Total Stamp Duty collection for Jan – Dec 2019 was N18billion.
- Total collection by FIRS from January 2020 to June 29th 2020 is as follows:
|Stamp duties remitted by Money Deposit Banks (MDBs)||20.00bn|
|Stamp duties revenue from stamping of instruments||7.90bn|
|Stamp duties revenue from stamping of instruments||39.00bn|
|Total stamp duty remitted into Federation Account from January, 2020 – May, 2020||66.00bn|
- This significant leap arose from the dynamism triggered by Finance Act 2019, sums warehoused by the CBN in respect of prior years, deployment of technology and stakeholders collaboration, etc.
- The collection performance of Stamp Duties hitherto witnessed is a tip of the iceberg compared to its potentials. The amendment and effective implementation of the Stamp Duty Act, simplified administrative processes plus the audit and recovery exercise will raise the bar significantly.
- The dependence on postage stamps for denoting Stamp Duties is one of the factors accounting for low collection performance in the past.
introduction of the FIRS Stamp Duties Adhesive Stamp will, among other
- plug the revenue sink-hole;
- enable proper accountability and transparency;
- simplify administration of Stamp Duties; and
- reduce disputes.
- The FIRS is prepared to reposition Stamp Duties as the next major revenue source for Nigeria.
- As revenue from oil and gas continues to dwindle due to global fall in demand and price, indirect taxes such as stamp duty remain the viable and sustainable alternative revenue source for funding budgetary requirements by the Nigerian Government.
- Let us use this gathering, as partners and stakeholders in the development of our dear country, to refocus our efforts on developing a tax system that works for all.
On behalf of the Board, Management and staff of the FIRS, I register my sincere appreciation to the leadership of the National Assembly for their support and encouragement to the Service.
My special thanks goes to the Honourable Minister of Finance, Budget and National Planning for always being there for the Service.
The FIRS is open to engagement with all stakeholders for the purposes of repositioning the tax system for the benefit of our dear country.
We therefore invite all and sundry to come join hands with us in the task of building a virile tax system that will be a pride of all.
Let me leave with us, the words of a former American President, Benjamin Franklin who said, and I quote “In this world nothing can be said to be certain except death and taxes”
Always remember that “it pays to pay your tax”.