An Overview Of The Stamp Duties Administration In Nigeria With The Finance Act 2019 Amendment

By Zhihwi Dauda Esq.

1.0 ABSTRACT

Stamp duty is one of the indirect taxes in Nigeria; it is tax on commercial and legal documents which records and gives effect to certain transactions.  Stamp duty has contributed a lot to the tax revenue generation for both Federal and State government for decades now. Recently, The Executive Chairman of Federal Inland Revenue Service (FIRS) Mr. Muhammad Nami, disclosed that FIRS generated and remitted =N=66 billion as stamp duty revenue into the Federation Account in five(5) Months between January to May, 2020.[[i]] this research also shows that The FIRS  for instance has from January, 2015 to July 8^th 2020 been able to collect and remitted into the Federation Account stamp duties cumulatively to an estimate of =N=127,044,220,692.56 (One hundred and twenty seven Billion, forty four Million, two hundred and twenty Thousand, six hundred and Ninety two Naira fifty six kobo). However, there is serious lack of awareness on the existence of this type of tax by the populace, this is the likely reason why recently; a lots of Nigerians  expressed their complete dissatisfaction and unwillingness to comply with the announcement made by Central Bank of Nigeria (CBN) instructing that all Deposit Money Banks(DMB) in Nigeria should place =N=50  stamp duty charge on every transaction of =N=1,000 and above.[[ii]] The confusion of many people was born out of ignorance and the fact that the Federal Government made the announcement through CBN, they thought the government was exercising its  veto power. However the government was actually implementing the provision of Section 89 of SDA and the Finance Act, 2019. The question to ask is “would the people have reacted the way they reacted, if there was sufficient public awareness on the administration of Stamp Duties? This has place a burden in my heart to come up with this article and make an attempt to bring to light an overview of the administration of Stamp Duties in Nigeria, stating the legal framework, types of duties chargeable and their rates and instrument that are subject to Stamp duties. My findings shows that, the stamp duties  Act is obsolete in context and content, the sanction, penalty and interest payable under the Act are ridiculously low and do not reflect the current economic realities and the policy direction of the government. The rate of Stamp Duties in some instrument is too low, and has led to the reduction in the needed tax revenue generation by government. Another serious challenge is lack of awareness by the tax payers on stamp duties fees. The research has made some far reaching recommendation ranging from the need for Stamp duties Act to be reviewed, re-organized, re-defined and  simplified by increasing the rates, penalty and fines charges under the Act, they need to use modern way of denoting stamp on the instrument and lost more. The research paper is generally aimed at creating awareness to tax payers to understand the basis why the duties are charged, how it is charged, the procedure involved and their rights.

2.0 INTRODUCTION

A tax is a compulsory charge imposed by the Government through its agency (a public institution) on the incomes or profit or on goods or services of an individual (natural person) and Companies/organizations (artificial persons) at a rate defined by legislation for the common benefit of a Nation. [[iii]] Taxation as a system did not just evolve from nothing but out of necessity to meet the needs of the society. Stamp duty is a type of indirect tax, because it is a tax levied on instruments (i.e. documents) rather than on income or profits.[[iv]]  Stamp duties just like other taxes despite being in existence since the Colonial era 1923; it’s still remains unpopular amongst many tax payers. Majority of people don’t want to pay tax voluntary, little wonder though taxation is as old as man yet it remains unpopular. [[v]]

Nigeria is Africa’s largest oil producer, yet it is also the most vulnerable to oil price shocks. According to the International Monetary Fund, the Nigerian economy is heavily dependent on the oil sector, which accounts for over 95 percent of export earnings and about 40 percent of government revenues.[[vi]] With the recent outbreak of Covid-19 pandemic globally which has affected the international price of crude oil and the world economy generally. Many Nations likewise Nigeria is looking inward on the ways of increasing its tax revenue generation to fund its yearly budget. On 1^st July, 2020, the Secretary to the Government of the Federation (SGF), Mr Boss Mustapha, who represented President Muhammadu Buhari, at the inauguration of the Inter-Ministerial Committee on Audit and Recovery of Back Years Stamp Duties and the Launch of the FIRS Adhesive Stamp, said thus: “Stamp duty would be second to oil in revenue generation.”[[vii]]

The Executive Chairman of the Federal Inland Revenue Service (FIRS). Mr. Muhammad Nami on 1^st July, 2020 equally stated thus: [[viii]]

“This matter of making the stamp duty (and by implication tax revenue) the next black gold has occupied my mind even long before I was appointed the executive chairman of the Federal Inland Revenue Service. I have thought that given the way the Nigerian economy has been experiencing some difficulties due to unpredictable shocks in the competitive international oil market, it would be economically wise that the country begins to activate its latent tax potentials, such as the stamp duty, which has long been neglected. For me, the key to Nigeria’s economic prosperity is the tax revenue driven by stamp duties in the face of dwindling oil revenue.”

Stamp duties is involved in the everyday affairs of the business world, but not until recent in 2020, little or no attention was paid to its details which are very important to the day to day running of most businesses and human activities. The Stamp duties Act Cap S8 LFN 2004, (Reverse Edition LFN volume 13 2010) is the principal Act that impose the chargeability of several instruments listed under the Act; though some instruments are exempted from paying duty. This paper will attempt to give a clear overview of the administration of stamp duties in Nigeria. Ranging from:

i. Conceptual clarifications of certain terms.
ii. The Legal framework on the administration of Stamp duties.
iii. Administration of stamp duties, appointment and duty of stamp duties commissioner, types of stamp duties, manner of denoting stamp duties.
iv. Stamp Duties rates and items, instruments chargeable for stamp duties by the FIRS.
v. Contentious bank deposit/transfer stamp duties charges and the concept of e-stamping of an instrument.
vi. Right of Tax payer to appeal against Stamp Duty Assessment;
vii. Offences and Penalty under Stamp Duties Act.
viii. Challenges to the administration of Stamp Duties Act.
ix. Recommendation/way forward.

3.0 CONCEPTUAL CLARIFICATIONS OF TERMS

3.1 STAMP means “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.[[ix]]

3.2 STAMPED with reference to instruments and material, applies to instruments and material impressed with stamps by means of an engraved or inked block die, adhesive stamps affixed thereto as well as to instruments and material digitally tagged with electronic stamp or notional stamp on an electronic receipt.[[x]]

3.3 INSTRUMENTS include every written document and electronic documents.[[xi]]

3.4 RECEIPT includes any note, memorandum, writing or electronic inscription whereby any money, or any bill of exchange or promissory note for money is acknowledged or expressed to have been received or deposited or paid, or whereby any debt or demand, or any part of a debt or demand is acknowledged to have been settled, satisfied, or discharged, or which signifies or imports any such acknowledgements, and whether the same is or is not signed with the name of any person.[[xii]]

3.5 DENOTING this term is used when the dies are impressed, fixed or adhesive on any document to indicate any duty paid.

3.6 EMBOSSMENT is the stamping of any document known as instrument by the use of a die and stamping machine.

 4.0 LEGAL FRAMEWORK ON ADMINISTRATION OF STAMP DUTIES IN NIGERIA

The law governing the administration of Stamp duties in Nigeria at the Federal level are: the Constitution of FRN 1999 as Amended, the Principal Act which is The Stamp Duties Act Cap S8 LFN (2004) Revised Edition Volume 13 LFN 2010 and the Federal Inland Revenue Establishment Act (FIRSEA) 2007 No 13 and any other regulation issued under FIRSEA Act, and Case law (Judicial precedents).

Stamp duties can be said to have originated  in Venice in the year 1604, and later  being introduced (or re-invented) in Spain in the year 1610s, the Netherlands in the year 1620s,  France in the year 1651, Denmark in the year 1657, and Prussia in 1682.[[xiii]] The England Stamp Duties Act was enacted in 1694[[xiv]] when a stamp duty was introduced in the United Kingdom during the reign of William and Mary for four years to assist in raising money for the prosecution of war against France.[[xv]] The current Nigerian Stamp duties Act[[xvi]] is traceable to the English Law as imposed in the country during the colonial era.  The law was first promulgated in 1939 repealing and amending certain provisions of Stamp duties Ordinance Cap 126 of 1923, The Stamp duties (Amendment) Ordinance of 1928 and the Stamp Duties (Amendment) Ordinance of 1931and 1923.[[xvii]] The Stamp duties Act  was subsequently amended in 1942, 1950, 1953, 1954, 1955, 1956, 1964, and was unified into the 1990 LFN, 2004 LFN and the revised edition of 2010 LFN, it was equally recently amended in 2019 by the Finance Act.[[xviii]]

Stamp duties is listed as item 58 under Exclusive Legislative list in the 2^nd schedule part I of the 1999 Constitution as Amended which implies that only the Federal Government is competent to legislate on the subject matter. This makes it solely the duty of Federal Inland Revenue Service being the only competent authority to collect and account for such taxes on their behalf. Thus The Federal High Court per Muhammad J in the case of Savannah Bank Ltd v D.G Ministry of Lands, Surveys & town Planning [[xix]] held thus:

“The above constitutional provision is clear and unambiguous. Anything set out in Part I of the Second Schedule to the constitution under is within the exclusive jurisdiction of the federal government and no state Government can delve into it. Under the Exclusive legislative list, Stamp Duties is listed as Item 57, this conclusively shows that any matter pertaining to stamp duties is within the exclusive domain of the federal Government and that it is only the Federal government that is by law empowered to collect stamp duties”

It is pertinent to note that by Paragraph 7, Item B of part II of the Second Schedule to the Constitution [[xx]] and Section 4(2) of Stamp Duties Act [[xxi]] the state government is empowered to collect Stamp duties in respect of transactions between individuals  residing in their respective States. This does not mean that the State can make laws imposing stamp duties which are exclusively vested in the Federal Government. However it is arguable whether the State Government cannot make laws in respect of the manner in which the Stamp duties on instrument executed between individual which is within its jurisdiction can be collected.

5.0 ADMINISTRATION OF STAMP DUTIES IN NIGERIA

5.1 REGULATORY AGENCY FOR THE ADMINISTRATION OF SDA

The regulatory agency for the administration of stamp duties in Nigeria as  regards to Stamping of instruments involving registered corporate bodies or between individuals within the Federal Capital Territory is the Federal Inland Revenue Service (FIRS)[[xxii]] and such duty is administered by a Stamp duty Commissioner representing the FIRS on behalf of the Federal Government of Nigeria. Whereas for transactions on instruments between individuals within any State of the Federation is administered by the State Internal Revenue Service (SIRS) through a State stamp duty commissioner.[[xxiii]]

There has been confrontation between the FIRS and NIPOST over who has the power to administer and collect Stamp Duties in Nigeria on behalf of the Federal Government of Nigeria, this has led to litigation in the case of Kasmal International Services Limited & Ors Vs Access Bank Limited & Ors FHC/L/C/1462/2013[[xxiv]] where NIPOST through their Agent the plaintiff in the matter instituted an action seeking the enforcement of Section 89 of Stamp duties Act in respect of the obligation of bank to affix postage stamp of =N=50 on receipts, electronic transfer and/or teller deposit  of monies from =N=1000 upward. Per Justice C.J Aneke on 17^th February 2014 delivered his judgment agreeing with the NIPOST power to enforce the collection of =N=50 on receipts, electronic transfer and or teller deposit  of monies from =N=1000 upward  from Banks on behalf of Federal Government in line with Section 5 and 89 of SDA. The judgement was later appealed to Court of Appeal Lagos division in the case of Standard Chartered Bank Nigeria Limited v. Kasmal International Services Limited & Ors CA/L/437A/2014[[xxv]] the issue of the power of NIPOST to enforce and collect Stamp duties was determined and Per Ejembi, Adamu, Moore and Nonyerem JCA unanimously held that NIPOST or its Agent lacks the fundamental statutory right or power to manage and collect Stamp Duties. It is praiseworthy to note that, Section 2 of the Federal Inland Revenue Service (Establishment) Act 2007 No.13 and Item 6 in 5^th Schedules to FIRSEA has statutorily and unequivocally empowered the FIRS to administer Stamp duties.

Remarkably with the enactment of Finance Act, 2019 which became operational in 13^th day of January, 2020, the Finance Act has amended Section 4(1) of Stamp Duties Act, the issue of who has the power to collect stamp duties on behalf of Federal Government has been put to rest. This is however what necessitated the Executive Chairman of FIRS Mr. Muhammad M.Nami to sign a publication of a Public Notice on Remittance of Stamp Duties deducted on Instruments between Corporate entities and an individual, group or body of individuals)[[xxvi]] as quoted below:

“The FIRS wishes to notify the public that pursuant to the amendment of S. 4(1) of Stamp Duties Act by the Finance Act 2019, the FIRS is the only competent authority mandated to impose charge and collect duties upon instruments specified in the schedule to the Act, where such instrument relate to matter executed between a company and an individual, group or body of individual. Thus FIRS is the SOLE Agency of the Federal Government of Nigeria for collection of all stamp duties deducted by the Office of the Accountant General of the Federation (OAGF), Central Bank of Nigeria (CBN), All Deposit Money Banks (DMB) Central Securities Clearing System (CSCS)in the capital market operation and other institution not mentioned”

In what looks like a resurrection of the matter once again, recently the NIPOST through its Agent instituted an action at Abuja Division of Federal High Court on 30^th of June, 2020 via an originated summons in Suit No: FHC/ABJ/CS/701/2020 between First October General Merchant Nigeria Limited & 1Ors vs. FIRS claiming that by Section 5(d) of NIPOST Act as amended 2019 and Section 2 of SDA as amended by Section 52 of Finance Act 2019, also Section 11(1)(2) &(3) and 89 of SDA,  NIPOST is the sole statutory agency in Nigeria that is empowered to mint, produce, distribute and regulate the of adhesive postages  stamps in Nigeria on the adhesive paper or electronic form. Hence, they are seeking for an  Order of interlocutory injunction restraining FIRS from carrying out any act in minting, production, distribution, selling and retailing the use of adhesive stamps and or electronic stamps to be produced by the FIRS to denote receipts, documents and registrable instruments in Nigeria. The Court is yet to determine the matter; hence it will be unprofessional for me to state my opinion on the matter.

It is safe to add that, the law remain valid as stated above, that is as at today; FIRS is the sole Federal Government Agency responsible for the administration of Stamp duties Act in Nigeria until the Apex Court of the land say otherwise or the law is amended.  We should equally Not forget the fact that per Kolawole J of the same Federal High Court Abuja Division  in the case of NBC v. NIPOST & Bethda International Merchant Nig. Ltd [[xxvii]]  held that NIPOST is not authorized by either the NIPOST Act or Stamp Duties Act to enforce the collection of Stamp Duties. The Court held further that NIPOST’s engagement of agents to enforce Stamp Duties Act’s provisions, by way of enforced sale of postage stamps, is beyond its statutory powers.

5.2 STAMP DUTY COMMISSIONER

5.2.1 APPOINTMENT: The Commissioner of stamp duty is the administrative head of the stamp duty, the Commissioner of Stamp duty for the FIRS is appointed by the President of FRN while that of state by the Executive governor of the respective State [[xxviii]] As for the other staff or officers who shall be commissioner for stamp duty to work with Commissioner shall be appointed by the Federal Civil Service Commission (FCSC) while that of State by the relevant State Civil Service Commission.[[xxix]]

5.2.2 DUTIES

i. General administration of the office.
ii. Assessment of duties on instruments, including imposing of penalties and interest where applicable.
iii. Custody of all stamping materials including dies and stamps.
iv. Stamping, Embossing of instruments and signing of the Instruments so stamped.
v. Adjudication.
vi. Tax education for duty payers.
vii. Accounting for duty collected.

Suffice to add here that, for the purpose of obtaining full information in respect of any instrument liable to duty under the Act, whether the instrument has been stamped or not, the Commissioner of Stamp duties may give notice to any person requiring him, within the time limited by such notice to: (a) Complete and deliver to the Commissioner any return or provide such information specified in such notice,(b) attend personally before the Commissioner for examination with respect to any matter relating to such an instrument, (c).produce or cause to be produced for examination at the place and time stated in such notice, which time may be from day to day for such period as the Commissioner may consider necessary, for the purpose of such examination of all relevant books, documents, accounts and returns which the Commissioner may deem necessary: or (d) Given orally or in writing any other information including name and address specified in such notice. The only restriction to the exercise of such power is where such rolls, books, records, papers, documents or proceedings are in the custody of the bank, in such circumstance the Commissioner is required to first carry out the inspection unaccompanied by any other person unless he decides that it is necessary for him to have assistance in determining whether any fraud or omission in relation to any duty has taken place.[[xxx]]

5.3 CHARGEABILITY OF DUTY ON INSTRUMENTS

From the time Stamp Duties Act came into force, duties are imposed or charged upon several instruments listed in the schedules to the Act at the rate provided for each types or classes of instruments under the Act. Therefore in summary the following Instruments and Receipts are liable or chargeable to Stamp Duties.[[xxxi]]

i. All written or printed dutiable instruments or receipts;
ii. All electronic dutiable instruments or receipts (i.e. in the form of electronic media content, electronic documents or files, e-mails, short message service (SMS), instant messages (IM), any internet-based messaging service, website or cloud-based platform, etc);
iii. All printed receipts (including POS receipts, focalized device receipts, Automated Teller Machine (ATM) print-outs and other forms of written or printed acknowledgment);
iv. All electronically generated receipts and any form of electronic acknowledgement of money for dutiable transactions.

5.4 TIME WITHIN WHICH AN INSTRUMENT MAY BE STAMPED: It is worthy to note that all instruments chargeable with stamp duty may be stamped within 40 days from the day of execution, therefore upon payment of the duties except otherwise provided in any other law. But where the instruments to be stamped are chargeable with ad valorem duty the instrument is required to be stamped before the expiration of 30 days after its first.[[xxxii]] However where an instrument has been submitted to commissioner for assessment before the expiration of time within which by law it ought to be stamped, such an instrument may still be stamped in accordance with the assessment of the commissioner within 21 days after notice of assessment.[[xxxiii]]

However with regard to Electronic Document Received in Nigeria, According to Sections 7(3)(a), 23(3) and 47 of the SDA, documents, receipts or instruments executed outside Nigeria but received in Nigeria must be presented for stamping within: (a). 10days in the case of Charter Parties; (b). 30days in the case of instruments subject of ad valorem stamp duties; or (c). 21days in any other instance. Therefore an electronic document, receipt or instrument executed outside Nigeria is deemed received in Nigeria if: (a). it is retrieved or accessed in or from Nigeria; (b).it (or an electronic copy of it) is stored on a device (including a computer, magnetic storage, etc.) and brought into Nigeria; or (c). It (or an electronic copy of it) is stored on a device or computer in Nigeria.[[xxxiv]]

5.5 TYPES OF STAMP DUTIES: Stamp duties are classified into two, the Flat/fixed duties and ad-valorem duties

 5.5.1 FIXED DUTIES These are duties that do not vary with the amount of consideration, this means that the value is not always taken into consideration while assessing. Example of instruments assessed with fixed duties include but not limited to the following:-

1. Guarantor forms
2. Proxy forms
3. Payment receipt Bank notes or bills payable at sight
4. Cheque leafs
5. Admission as solicitor or notary public
6. Appointment of Trustee or of Attorney
7. Will
8. Notary public
9. Bank Cheque per leaflet
10. Memorandum, Articles of Association (Pre and post incorporation

5.5.2 AD-VALOREM DUTIES: These on the other hand are duties that vary with the amount of consideration in accordance with the scale provided in the relevant schedule fixed by Government. In this case the amount involved is always taken into consideration in order to determine the actual duty payable. Example of instruments with ad-valorem duty assessment include but not limited to the following:-

1. Deed of Assignment
2. Deed of Release of Mortgage or debenture loans
3. Tenancy/Lease Agreement
4. Mortgage and Debenture loans
5. Property valuation
6. Lease agreement on plant and machinery.
7. Power of Attorney (irrevocable/land related)
8. Promissory notes
9. Policy of life insurance
10. Bill of sale

5.5.3 INSTRUMENT EXEMPTED FROM STAMP DUTY CHARGES: It is praiseworthy to note that, though some documents or instruments are exempted from chargeability to stamp duty, these exemptions are only from the payment of stamp duties but they will also be subjected to be stamped by the stamp duty commissioner, a stamp to show that no duty is charged must be impressed on such instrument to prove its acceptability in Court or otherwise. The list of exempted instruments are as follows[[xxxv]]

1. Admission as military advocate.
2. Affidavit or declaration made for the purpose of being filed in any court in Nigeria or before any judge or officer of such court.
3. Agreement or memorandum for the hire of any labourer.
4. Appraisement made in pursuance of the order of court in exercise of admiralty jurisdiction.
5. Bill or note issued by the Central Bank of Nigeria.
6. Letter or Power of Attorney or proxy filed in a High Court in Connection with probate jurisdiction of the Court.
7. Transfer of shares in the Government or legislative stocks or funds in Nigeria.
8. All instruments on which the duty would be payable by Government
9. All documents relating to the transfer of stock and shares
10. All Shipping Agreement

Section 56(b) of the Finance Act, 2019 has added three (3) additional items on the exemption list as follows:

i. Shares, stock or securities transferred by a lender to it approved agent or a borrower in furtherance of a regulated securities lending transaction.
ii. Shares, Stock or securities returned to a lender or its approved agent by a borrower in pursuant to a regulated securities lending transaction
iii. All document related to a regulated securities lending transaction carried out under regulation issued by the Securities and Exchange Commission

5.6 MANNER OF DENOTING STAMP DUTIES

Section 5 of the Stamp duties Act has provided several forms or methods by which Stamp duties may be denoted. They are as follows:[xxxvi]

1. Employing a die impressed on an instrument as an adhesive stamp;
2. Affixing printed adhesive stamps (issued by the Service) on instruments;
3. Direct electronic printing or impression on the instrument.
4. Electronic tagging.
5. Issuance of stamp duties certificate.
6. Any other form of acknowledgement of payment for stamp duties adopted by the Service.

5.7 RATES AND ITEMS, INSTRUMENTS CHARGEABLE WITH STAMP DUTIES BY THE FIRS

 5.7.1 FIXED/FLAT RATE DUTIES, TABLE 5.7.1, SOURCE: FIRS NOTICE [[xxxvii]]

5.7. 2 AD VALOREM DUTIES RATES, TABLE 5.7.2, SOURCE: FIRS NOTICE [[i]]

5.8 ELECTRONIC STAMP DUTIES

5.9 DEFINITION: E-Stamping is an electronic process of stamping of instruments or documents upon payment of the approved duties rates electronically and generating the receipt of payment without coming in contact with the tax officials.

5.10 PROCEDURE FOR E-STAMP DUTIES PAYMENT TO FIRS

TABLE 5.11

5.11 PROCEDURE FOR E-STAMPIMG FOR NEW COMPANY IN THE PROCESS OF REGISTRATION WITH THE CORPORATE AFFAIRS COMMISSION (CAC): Register and obtain login detail with CAC, then log in into CAC website https://services.cac.gov.ng/login, then click on company registration and select new registration. You will be required to log in the Availability Code (AC) assigned to your proposed company approved name by CAC, then proceed to fill in all the required information on the page which includes: Proposed Company details, amount for authorised share capital which will determine the amount of duty payable, directors and secretary’s details, shareholders information, memo and article of association; then proceed to pay filling fee to CAC. Once your payment went successfully the site will automatically redirect you to E-stamp duty payment, then proceed to pay via any of the payment gateway displace on the page. The pre-incorporation document will be electronically stamped. You then print it coloured and proceed to print your E-stamp duty payment receipt.

 5.12 PROCEDURE FOR E-STAMPING FOR CAC POST INCORPORATION DOCUMENTS: The procedure is the same with the one in Table 5.7 above. The duty payers has to follow each step to another until he pays and print out his E-receipt which will be submitted physically together with others documents to CAC.

5.13 ADVANTAGES OF E-STAMPIMG

1. It is faster, simple and easy to administer.
2. It enhances accuracy.
3. It eliminates corruption through human involvement.
4. It promotes voluntary compliance.
5. It is cost effective.
6. Duty payer can at any time and on any day pay his duty, print and re-print his payment E-receipt at the comfort of his room.

5.14 DISADVANGES OF E-STAMPIMG

1. It is not user friendly to uneducated duty payer
2. The ICT infrastructural challenge of Network can easily affect E-stamping and led to lots of revenue.
3. Risk of being hacked using e-payment system.
4. The challenge of transferring money between different e-payment gateways.
5. Dispute on transactions failure; where duty payers’ account might have been debited while the FIRS’s account has not been credited electronically.

5.15 THE CONTENTIOUS BANK DEPOSIT/TRANSFER STAMP DUTIES CHARGES: On 15th January 2016, the Central Bank of Nigeria (CBN) issued a circular, “Collection and Remittance of Statutory Charges on Receipts to Nigeria Postal Service under the Stamp Duties Act”(the Circular) to all Deposit Money Banks (DMBs) and other Financial Institutions (FIs) in Nigeria. All DMBs and FIs were instructed to charge Fifty Naira (N50) as stamp duty (SD) on all receipts issued in acknowledgment of services rendered, in respect of electronic transfer and teller deposits from N1, 000 and above in accordance with the provisions of Section 89 of Stamp Duties Act, Cap S8, LFN 2004 (SDA) and the Federal Government Financial Regulations 2009 (FGFR)[[i]] this circular has been challenged by litigations in several cases [[ii]] but was finally put to rest by the Finance Act 2019

Imperatively, it should be noted also that, the stamp duties is charged only on current accounts; it does not affect salary or saving account. However all receipt in respect of whether it is cash or electronic fund transfer of 1000 and above in a current account is subject to =N=50 stamp duty charge. It is charged per transaction that is =N=1,000 and above, it is not charge per day or month or per Volume because it is a flat/fixed duties instrument. The duty is charged from the receiving account and not from the account making the payment.

The Bank Deposit/Transfer Duties Charge is not applicable to the following transaction:[[iii]]

i. All withdrawal from saving Account
ii. All fund transferred sent to Saving Account
iii. All payment of salaries and wages made into salary account.
iv. Deposits of fund transfer done by same person from one of his account to another in same bank or to any of his other account with same BVN number in other banks.

The public should equally note that, they reserved the right to complain when ever their transaction of bank deposit/transfer whether cash or electronically which fall under any of the four (4) exempted listed above is subjected to stamp duty. They can complain to the customer care unit of their bank or send a complaint to Consumer Protection Department of the CBN through their website www.cbn.gov.ng.

5.16 ADJUDICATION OF STAMP DUTY

5.16.1 PROCESSS OF ADJUDICATION It is the right of tax payer to seek for the opinion of the Commissioner of stamp duty as to the amount of duty chargeable or payable on his instrument upon payment of a fee of =N=26kobo and furnishing the facts and circumstance affecting the amount of stamp duty chargeable together with hard copies of the instrument and other supporting documents [[iv]] That is to say, the applicant is asking the Commissioner to express their opinion on the liability to the duty or the actual amount due. Once such is done then an application for adjudication is said to have commenced. The duty assessment is then made according to the rates provided under the laws as may be revised from time to time by a resolution of the National Assembly by the relevant Stamp duties Commissioner. The Certification to be issued by the Commissioner and shall be endorsed on the instrument stating that a duty is not chargeable on such instrument, or the particular amount with which it is chargeable. Therefore as far as the Commissioner has expressed his opinion, the instrument may then be stamped with that amount duly determined. Where the instrument is not chargeable to duty, a stamp to show that no duty is charged must be impressed on such instrument to prove its acceptability in court or otherwise.[[v]]

 5.16.2 LIMITATION OF ADJUDCATION:

1. Adjudication cannot authorize the stamping of an instrument after execution which by law can only be stamped before execution. And where the Court has rules that an instrument is not duly stamped, subsequent adjudication cannot make it duly stamped.
2. Adjudication process cannot prejudice rights that have been asserted and relied upon prior to it. This means that no two commissioners are permitted to adjudicate on one particular document once his counterpart has adjudicated on it before it is brought to his notice.[[vi]]

5.16.3 SIGNIFICANCE OF ADJUDICATION IN STAMP DUTIES ADMINISTRATION:

1. It is the first step in disputing the Stamp Duties office’s view of the correct amount of duty payable.
2. It satisfies statutory requirements of Section 15 & 16 of SDA.
3. It determines the duty payable which makes the document admissible in evidence for all purpose not withstanding any objection as to the duty upon its payment.
4. Adjudication can also be relied on to convince third parties that an instrument is genuine.

5.17 RIGHT OF TAX PAYER IN RESPECT OF STAMP DUTIES ASSESSMENT

1. Right to apply for adjudication to the commissioner of stamp duty and be issued a certificate indicating the expression of the commissioner’s opinion.
2. Right to Appeal against any duty assessment issued in respect of his instrument. Section 21 of SDA Act [[vii]] provides to the extent that any person dissatisfied with the assessment of the Commissioner may challenge it by appealing to Tax Appeal Tribunal Established (which was under Section 59 FIRSEA)[[viii]] or he can appeal to the Federal High Court or the High Court of the state if the assessment was issued by State commissioner of Stamp duties within 21 days of such assessment and the payment of the duty. Where the Court decided that the assessment of the Commissioner is wrong, the Court is required to assess the correct amount of duty and the person shall pay the difference or get a refund where the amount already paid is more than the re-assessed amount.[[ix]]
3. Right to be educated on any provision of the Stamp duties Act by the Commissioner of Stamp duties or any of his staff.

5.18 THE EFFECT OF NON PAYMENT OF STAMP DUTY ON THE ADMISSIBILITY OF DOCUMENTS/INSTRUMENT IN THE COURT OF LAW.

 5.18.1 The general rule is that, dutiable instruments that are not stamped upon payment of the relevant duties are in admissible as evidence in the Court of Law. That is to say only instruments which are duly stamped upon payment of duty are admissible as evidence in the court of law. [[x]]

 5.18.2 The exception to this general rules are as follows:

i. The Court can direct that such an unstamped instrument should be assessed and stamped upon payment of the duty and penalty for late payment made before the admissibility of such instrument.[ ]
ii. Any instrument that is tendered in evidence in all criminal proceeding may be admitted despite not being duly stamped.
iii. Any instrument needed to prove an act of bankruptcy or to establish fraud will be admitted by Court even if it is unstamped.
iv. Receipt: where it can be established the failure to stamp it was due to the ignorance or illiteracy of the person who sought to tender it in Court, but the Court will direct the person to go and pay the duty first before the admission.[ ]

6.0 CONTRIBUTIONS OF STAMP DUTIES TO THE TAX REVENUE IN NIIGERIA: The Stamp Duty is an excellent source of revenue to both the Federal Government and State Governments. The Federal Inland Revenue for instance from January, 2015 to July 8^th 2020 been able to collect stamp duties cumulatively an estimate of =N=127,044,220,692.56 (One hundred and twenty seven Billion, forty four Million, two hundred and twenty Thousand, six hundred and Ninety two Naira fifty six kobo)

6.1 TABLE 6.1 SHOWING ABUJA STAMP DUTIES OFFICE CONTRIBUTION AS A CASE STUDY COLLECTION ANALYSIS 2007 TO 8^TH SEPTEMBER, 2014

           SOURCES: FIRS Preliminary Inspectors of Taxes (PIT) Course’s Manual,2019, Pg 443.

6.2 TABLE 6.2 SHOWING STAMP DUTIES COLLECTION BY FEDERAL INLAND REVENUE (FIRS) NATIONWIDE 1^st JANUARY 2015 TO 8^TH JULY,2020

SOURCE: FIRS Revenue Accounting Department ( Raddashboard Report)

7.0 OFFENSES AND PENALTY UNDER STAMP DUTIES ACT

It is imperative to note that failure to comply with the provisions of the Stamp Duties Act may generally result in any of the following consequences: Prosecution for offences under the Act, Payment of penalties or fines of various degrees, inability to use the relevant instrument as evidence in court or other judicial or quasi-judicial proceedings [[xiii]] and may face enforcement actions by the relevant tax authority under Section 110 & 111 0f Stamp Duties Act etc. Below are the various offenses and penalties and fines provided under the Stamp Duties Act:

1. Failure to disclose all the relevant facts and circumstances on an instrument with the aim of defrauding the Government, a fine of =N=40 on conviction. [S.9 SDA]
2. Any person who neglects or refuses to cancel an adhesive stamp liable to a fine of twenty naira [S.11 (3) SDA]
3. Fraudulent removal of adhesive stamps, or where any person sells or affixes to any other instrument or uses for any postal purpose any adhesive stamp which has been so removed, with intent that the stamp may be used again, or sells or offers to sale or utters any adhesive stamps which has been so removed shall be guilty of an offence and liable on conviction to a fine of =N=100 [S.13(1)&(2) SDA]
4. Any approved person that enrols, registers or enters in or upon any rolls, books or records any instrument chargeable with duty, which is not duty stamped shall be guilty of an offence and liable on conviction to a fine of =N=20 [S.25 SDA]
5. Failure to stamp a document within the prescribed period of 40 days as provided, a penalty of =N=20 where the penalty exceeds twenty naira an additional penalty at the rate of ten percent. [S.23(1) SDA]
6. Failure to prepare a duly stamped instrument of admission or to make duly stamped register a fine of =N=20 on conviction [S.27(2)SDA]
7. Refusal of an appraiser to write out the amount of valuation and duly stamp same within 14 days after the making thereof, or if he first discharges the amount of the appraisement or valuation, a fine of =N=40 on conviction [S.32(1)SDA]
8. Issuing any unstamped bill or note, a fine of twenty naira on conviction [S.42(2)SDA]
9. Failure to stamp any policy of insurance within one month, a fine of =N=40 against every person that makes or delivers the policy or receives or takes credit for any premium or consideration. [S.87 SDA]
10. Any person that gives a receipt liable to duty and not duly stamped, or refuses to give a receipt duly stamped or upon payment of an amount of four hundred naira or upwards, gives a receipt for a sum not amount to four hundred naira or separate or divides the amount paid with intent to evade the duty, a fine of =N=20 on conviction [S.92 SDA]
11. The Managing Director of a company, the Secretary and other principal officers that issues a share warrant or any instrument to bearer without being duly stamped, a fine of =N=100 on conviction. [S.96 SDA]
12. Every person to whom a stock certificate to bearer or an instrument to bearer chargeable as a stock certificate to bearer is issued without being duly stamped shall be guilty of an offence and be liable to a fine of =N=100. [S.98(2) SDA]
13. Every person that executes receives issues or takes by way of security any warrant for goods not being duly stamped, a fine of =N=40 on conviction. [S.99(3) SDA]

 8.0 CHALLENGES IN THE ADMINISTRATION OF STAMP DUTIES ACT

1. Appointment of Stamp Duty Commissioner, the Act did not state the qualification requirement of a person that can be appointed as Stamp duties Commissioner. This office required an officer that is experienced in the field of law and Estate Valuer to be able to adjudicate on an instrument presented effectively.
2. Stamp duties Act did not make provision for enforcement of the non admissibility of unstamped instruments despite the admissibility principle. There is no sanction on those that violate the principle or on those that accept unstamped instrument for process. In the FCT for instance, dutiable instruments are still being accepted for registration by Abuja Geographical Information Systems (AGIS) and many post incorporation instrument which are unstamped and no stamp duty paid on it are accepted by Corporate Affairs Commission (CAC) for process once the presenter pays the CAC’s relevant processing fees. Many other Land Registration Departments; both at Federal and State level do accepts unstamped dutiable instrument for registration without recourse to Stamp duties Act.
3. Even the Courts in Nigeria are still accepting dutiable instruments e.g. Tenancy Agreement, Deed of Assignment and Irrevocable Power of Attorney in land cases as evidence without the right duty paid on it as required by the Stamp duties Act.
4. Fake stamped documents are still being accepted for registration without recourse to verification from the Tax Revenue Authorities.
5. Section 22(1) of SDA requires judges, magistrates, arbitrator or referee to take notice of whether any instrument tendered before it has been duly stamp as required by law, but in practice such is not being done and no action is being taken.
6. The Stamp Duties Act is obsolete in context and content. A perusal through the sanction, penalty, fines and interest payable under the Act is ridiculously low and does not reflect the current economic realities and the policy direction of government.
7. The rate of Stamp Duties in some instrument is too low, and has led to reduction in the needed tax revenue generation by government.
8. The Act did not provide clearly on the residency matter, particularly where an instrument is executed by a person that reside in more than one state as to which tax authority has the jurisdiction in such case.
9. There is serious lack of awareness by the tax payers on the instruments that are subject to Stamp Duties and their respective rates in Nigeria.

9.0 RECOMMENDATION:

1. 1. The Joint Tax Board should intensify efforts in creating public awareness on instruments that are required by law to be Stamped and relevant fees payable
   2. The Stamp duty Act should be reviewed, re-organized, re-defined, simplified and also state the extent and limit of the Commissioner’s powers, harmonize list of instruments and increase the rates applicable to reflect current economic realities and the policy direction of Government with respect to job creation to encourage investment.
   3. Special division of Federal or State High Courts should be assigned to handle stamp duties related matter where Stamp Duties offenders will be prosecuted so that they will not go free; so as to serve as deterrent to others who might want to carry out such an unpatriotic acts.
   4. Those responsible for implementing the law should intensify efforts in increasing awareness of its provisions through adequate publicity and give legal backing to ensure its effective enforcement by the authorities concerned to carry out regular inspection visits to all relevant agencies responsible for the keeping of rolls, books or other instruments liable for duty.
   5. Effective collaborations should be created between the Federal Inland Revenue Service (FIRS), State Internal Revenue Service (SIRS) and other relevant stakeholders such as Abuja Geographical Information System (AGIS); States land registry, Federal Housing Authority (FHA), Mortgage Houses and Property developers to harmonize the operation of the system.
   6. Inspection visits to all organizations where dutiable instruments are lodged for verification with a view to recovering unpaid duties will surely serve as a veritable tool for ensuring compliance with the law and increase in revenue accruing to governments at various levels from Stamp duties.
   7. More powers should be given to the Commissioners empowering them to make inspection visit to courts, land registries and other places where these instruments are being used without recourse to confirmation or verifications.
   8. The manner of denoting stamp should be modernized to meet International best practice as is obtainable in other places across the globe such as U.K, Australia and Singapore.
   9. The manner of office copies archiving should be modernized from the traditional way of stockpiling to electronic system of scanning and storing using high powered scanners.

 10.0 CONCLUSION

The whole world is presently affected by the Covid-19 pandemic which has obliterated the economy of many Nations globally; Nigeria inclusive. There is therefore a need for Nigeria to look inward for ways of funding its huge budget and reduce its yearly challenge of budget deficit through an increase in tax revenue generation. The current Nigeria Tax Policy direction is tailored toward increase of the indirect taxes such as Valued Added Tax (VAT) and Stamp Duties (SD) while at the same time reduction of the direct taxes such as Company Income tax (CIT), Education Tax, Capital Gain Tax (CGT) etc. Therefore the Federal government is on the right track by it recent act of strengthening the administration of Stamp Duties which was able to generate about 66 Billion in the first two quarters of 2020. However the government need to establish a strong foundation of legal framework for the application of stamp duties in Nigeria. There is need to amend Section 4(1) of SDA this year via the proposed Finance Act, 2020 by inserting a proposed Section 4(1)(A) to read thus: “Notwithstanding the provision of any law including the NIPOST ACT as Amended 2019, the FIRS shall produce adhesive postages  stamps or any other material including by electronic means to be used for stamping of duties paid in accordance to this Act”  This will put to rest the unending litigation by NIPOST and its agents against the administration of stamp duties  particularly as it relates to Section 5, 11(1)-(3) and  89 of SDA. If this is not done, these litigations in my opinion have and may continue to hamper the effective application of stamp Duties in Nigeria.

Zhihwi Dauda Esq. (LL.B, B.L, LLM & ACIT) E-mail: daudathihwi@gmail.com Phone: 080595386710

[i] Fadeyi “CBN Stamp Duty Charges On Deposits – Can Something Be Built On Nothing” https://www.mondaq.com/nigeria/financial-services/949606/cbn-stamp-duty-charges-on-deposits-can-something-be-built-on-nothing published on  (accessed on 9^th July,2020

[ii] Kasmal International Services Ltd (KIS Ltd) v. CBN Suit No: FHC/L/CS/1710/2013, Standard Chartered Bank Nigeria Ltd (SCBNL) v. Kasmal International Services Ltd (KIS Ltd)  & 22 Ors, (2016) 27 TLRN 1, Kasmal International Services Ltd (KIS Ltd) v. CBN (Suit No: FHC/L/CS/1710/2013), Retail Supermarkets Nigeria Limited v. Citibank & CBN Suit No: FHC/L/CS/126/2016., NBC v. NIPOST & Bethda International Merchant Nig. Ltd⁸  Suit No. FHC/ABJ/CS/869/2015 (Coram Kolawole, J (judgment delivered on 13 April, 2017 and Kasmal International Services Ltd (KIS Ltd) v. 22 DMBs Suit No: FHC/L/CS/1462/2013.

[iii] The Citizen publisher online “CBN clarifies N50 stamp duty on bank transactions” 22^nd Jan,2016 https://thecitizenng.com/cbn-clarifies-n50-stamp-duty-on-bank-transactions/ (Accessed on 9^th July,2020)

[iv] S. 15 and 16 of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[v] S.19 of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[vi] S.20 of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[vii] S.21 of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[viii] S.59 and 5th Schedule to Federal Inland Revenue Service (Establishment) Act 2007 No.13

[ix] S.21(3) &(4) of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[x] S.19 of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[xi] S.22(1)-(4)7 of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[xii]S.91(3) of Stamp Duties Act Cap S8 LFN 2004 Reversed Edition volume 13 LFN 2010

[xiii] Note that, the relevant tax authority can only recover stamp duty fees not paid within 5 preceding years as provided in Section 114 of Stamp Duties Act, 2004 LFN 2004 Reversed Edition Volume 13 LFN 2010.