Saturday, August 01, 2020 / 2.00PM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV
Stakeholders at a recent Accion Microfinance Bank forum explored the implications of "Force Majeure & Stamp Duties Act" on the financial market especially the Micro-Finance Institutions (MFIs).
Giving his opening remarks, the MD/CEO of Accion Microfinance Bank, Mr. Taiwo Joda believed the Virtual webinar was an opportunity to get more clarification on how Microfinance banks can navigate the challenges of the Force Majeure clause and the application of the Stamp Duties Act.
Delivering the first presentation, Mr. Ngo-Martins Okonmah, Senior Associate, Aluko and Oyebode Legal firm described the Force Majeure clause as a contract-based term that is determined by courts. According to him contract terms are critical to the invocation of force majeure in contractual agreements in the country.
He stated that under the Force Majeure clause there is the "Closed list" which has a specified range of events to determine its inclusion and the "Non-Exhaustive list" which is broader in terms of events that can be accommodated for declaring it.
Considering the COVID 19 Pandemic, Mr. Okonmah, pointed out that in the financial market a borrower who declares force majeure on his/her loan will be breaching the contract, as the documentation did not capture it. He said going forward Microfinance Banks should adopt the "Force Majeure" clause in future contracts and service agreements between Microfinance Banks and Vendors.
Looking at the Stamp Duties Act in Nigeria, Nike James. Partner, Tax, Regulatory and People Services, KPMG Professional Services, asserted that the banking industry including Microfinance Institutions had the highest risk in terms of exposure.
According to her the current administration had a big drive to recover stamp duties which will have wide implications for the financial market and economy.
She cited the fact that the Federal Inland Revenue Service, FIRS which is the government agency at the forefront of SDA collections achieved a 1,000% growth in stamp duties collection, realizing N66bn in H1, 2020 compared to N6bn in the corresponding quarter; while a Inter-Ministerial Committee was recently set up to coordinate and ensure the increase in revenue from stamp duties, with an annual target of N1trn annually.
Nike James highlighted the following as the burning issues to be addressed: the introduction of extraneous rates/instruments, Audit of stamp duty collected on electronic transfer pre-finance Act and Demand of Stamp Duties by State tax authorities.
On the steps that has to be taken by stakeholders in the industry like the National Association of Microfinance Banks, three areas were identified namely;
For individuals, Nike James also harped on the need for them to review core banking application for proper deduction of stamp duties, prepare for stamp duties audits by FIRS for 2015 to 2019 FY and the need to proactively conduct a stamp duty check and diagnostic review on physical documents.
She called for a clear definition of force majeure and its implications and collaboration amongst the microfinance institutions to address the issues and concerns.
Also contributing to the discourse, Oghogho Makinde, Partner, Aluko & Oyebode said another area of consideration will be the approach on Stamp Duty treatment of electronic documents received.