We \explained what is Stamp Duty, the bank and other instruments
charges. Also, Instruments chargeable by the State Internal Revenue Service in Nigeria.
Introduction
Nigerian federal government in 2016 sent a Stamp Duties Amendment Bill to the House of Representatives to amend. The Bill seeks to expand the scope of the extant Stamp Duties Act CAP. S8 L.F.N. 2004 (“SDA”) by making receipts issued in respect of deposits made into a bank liable to the imposition of stamp duties. It also seeks to increase the respective fines that will be meted out to persons that contravene provisions of the SDA.
It will be recalled that on 15 January 2016, the Central Bank of Nigeria (CBN) relied upon the decision of the Federal High Court in Standard Chartered Bank Nigeria Limited v. Kasmal International Services Limited and 22 Ors and proceeded to issue a circular titled ‘Collection and Remittance of Statutory Charges on receipts of Nigeria Postal Service under the Stamp Duties Act’. The said circular directed all deposit money banks and financial institutions to charge a duty of N50 (Fifty Naira) for services rendered in respect of electronic transfers and teller deposits from N1,000 (one thousand Naira) and above on behalf of the Nigeria Postal Service.
However, in April 2016, the Court of Appeal overturned the decision of the Federal High Court in the above case. It held that electronic funds transfer and teller deposits were not instruments within the contemplation of the provisions of the SDA and that the Nigeria Postal Service does not have the power to impose and collect stamp duty on such transactions. Consequently, the decision of the Court of Appeal rendered CBN’s circular nugatory.
It was following the above decision of the Court of Appeal that the Bill was introduced in the House of Representatives. The significant changes in the Bill are highlighted below:
Definition
What is Stamp?
Stamp Duties Amendment Bill in 2015 expands the definition of “stamp” to include electronically generated stamps or stamps embossed through a point of sale (POS) machine or an adhesive postage stamp with face value or specified value.
What is Stamp Duty Charge in Nigeria?
In line with the Federal Government of Nigeria non-oil sector revenue generation drive, A Letter from the Central Bank of Nigeria dated 15th January, 2016 and backed by Stamp Duty Act LFN 2004 and a court ruling on in 2013 authorized all Deposit Money Banks (DMBs) and other financial institutions to collect 50 Naira charge.
What is Stamp Duty on Bank Deposits in ?
The Bill seeks to include receipts issued in respect of deposits made into a bank as instruments for which stamp duty can be imposed. This will render the decision of the Court of Appeal in Standard Chartered Bank Nigeria Limited v. Kasmal International Services Limited redundant.
Issues Arising
It appears that the Bill intends to establish a legal basis for the government to impose stamp duties on bank receipts as was previously ordered by the CBN circular of January 15, 2016.
The position of the law is that a tax can only be imposed on a subject where there is a clear intention of an Act of Parliament to impose such tax on the subject. Accordingly, the rate of tax to be charged on a particular subject can only be deduced from the act of parliament imposing the tax.
Section 3 of the SDA currently provides that the duties to be charged on the specified instruments shall be duties specified in the Schedule to the SDA. In the Schedule, the duty to be paid on receipts is 2 kobo for every receipt given upon the payment of money amounting to N4 or upwards.
While the Bill has proposed an upward revision of the threshold for receipts chargeable with stamp duty to the sum of N1000 and above, there is no corresponding proposal for a review of the rates to be paid on such receipts. It can, therefore, be argued that if the Bill as currently drafted, is passed into law, the amount that will be payable as stamp duty on chargeable receipts will remain 2kobo and not the N50 ordered to be charged by the Central Bank
Considering this apparent loophole, it is likely that any future directive given to banks to charge N50 as stamp duty on each deposit above N1,000 will again be challenged on the grounds that the applicable rate under the amended SDA is 2 kobo for every receipt issued for the sum of N1,000 and upwards.
However, it should be noted that the law will not have a retroactive effect and would only take effect from the date the law is passed. Thus, bank receipts which were hitherto not chargeable with stamp duty will only become chargeable with stamp duty once the Bill has been passed into law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
The Joint Tax Board at its meeting in Birnin Kebbi, Kebbi State between 7th and 8th May 2002, reviewed some Stamp Duties Rates in line with section 4(1) and (2) of the Stamp Duties Act Chapter 411 LFN 1990.
The Board reviewed the Stamp Duty Rates to reflect the current economic realities in the country and to ensure harmonisation and uniformity in the application of the rates. The revised rates are as follows\
Instruments chargeable by the State Internal Revenue Service
A. Flat Rate Charges
| Type of Instrument | Old Rate | New Rate | |
| 1. | Affidavit-Affirmation, Statutory declaration. Declaration of age, Declaration of loss of items; Declaration of Ownership of property etc. | 15.00 for original Copy and 10.00 | 10.00 original Copy and 5.00 extra copy. |
| 2. | Ordinary Tenancy Agreement (not involving corporate bodies, Government or Agencies) | 25.00 | 250.00 |
| 3. | Ordinary receipts | 5.00 | |
| 4. | Certificate of Occupancy. | 100.00 | 50.00 original copy and 20.00 Counterpart copy. |
| 5. | Agreement (Under Seal) | 20.00 original and 10.00 for each extra copy. | 50.00 original and 20.00 extra copy |
| 6. | Agreement (Memo of any agreement) | 15.00 original and 10.00 extra copy. | 50.00 original and 20.00 extra copy. |
| 7. | Oath and other affiliate bodies relating to above | 15.00 | 50.00 original and 20.00 extra copy. |
| 8. | Bond (ordinary) | 15.00 original and 10.00 extra copy. | 50.00 original and 20.00 extra copy. |
| 9. | Gift (Land) Gift (Other than Land) | 15.00 25.00 | 50.00 original and 20.00 extra copy |
| 10. | Collateral Security | 20.00 | 50.00 original and 20.00 extra copy. |
| 11. | Certificate | 15.00 | 50.00 original and 50.00 original and 20.00 extra copy. |
| 12. | Legacy (Movable Property) | 1.00 on every 100.00 | 50.00 original and 20.00 extra copy. |
| 13. | Proxy forms or cards | 50.00 | 50.00 original and 20.00 extra copy. |
| 14. | Partnership | 100.00 | 50.00 original and 20.00 extra copy. |
| 15. | Bank Guarantee | 15.00 original and 20.00 extra copy. | 50.00 original and 20.00 extra copy. |
| 16. | Appointment of Trustee or of Attorney | 50.00 | 50.00 original and 20.00 extra copy. |
| 17. | Appointment of Commissioner for Affidavit | 50.00 | 50.00 original and 40.00 extra copy. |
| 18. | Warrants of Attorney of any Kind | 50.00 | 50.00 original and 20.00 extra copy. |
| 19. | Notaries Act | 2.50 | 50.00 original and 20.00 extra copy. |
B. Ad-Valorem Charges
| Type of Instrument | Old Rate | New Rate | ||
| 1. | Contract Agreement | 1.00 on every 200.00 | 1.00 on every 200.00 | |
| 2. | Land Agreement | 1.00 on every 50.00 | 1.00 on every 50.00 | |
| 3. | Lease Agreement, Sublease agreement | 1.00 on every 50.00 | 3.00 on every 100.00 | |
| 4. | Lease Hold Agreement or Rent Agreement | |||
| (i) | If the term is less than 1 year | 1.00 on every 50.00 | ||
| (ii) | 1-7 years | 40.00 0n every | 3.00 on every (100.00 (multiplied by the number of years) | |
| (iii) | 7-12 years | 40.00 on every 50.00 | ||
| (iv) | 21 years and above | 5.00 on every 50.00 | ||
| (v) | Indefinite period | 6.00 on every 50.00 | ||
| 5. | Deed of Assignment Deed of Ratification, Deed of Confirmation | 1.00 on every 50.00 | 1.00 on every 50.00 | |
| 6. | Deed of Release, Hire Purchase or Surrender | 1.50 on every 200.00 | 1.00 on every 200.00 | |
| 7. | Legacy (Immovable) | 50.00 | 1.00 on every 100.00 | |
| 8. | Promissory Notes/IOU | 1.00 on every 200.00 | 1.00 on every 200.00 |