Controversy trails stamp duty collection in stock market



The complex nature of collecting stamp duties as it relates to contract notes has continued to create confusion in the stock market with stockbrokers claiming that they are being threatened by the Federal Inland Revenue Service (FIRS) and Nigerian Postal Service (NIPOST).


The operators are indeed seeking clarification on the modalities for remitting stamp duties as it concerns transactions at the Nigerian stock market and the appropriate agency that is responsible for its collection. BusinessDay learnt that some stockbroking firms had indeed written to the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to intervene and direct operators on what to do.


The managing director of a stockbroking firm with headquarters in Lagos in an interview with BusinessDay said: “There is a serious controversy and capital market operators are being harassed by both government agencies who say they are the rightful agency and both quote their statute. We are at the wrong end as we get threatening letters regularly. We have written to SEC and NSE to intervene and direct operators on what to do but there is no response.” The managing director of Signet Securities and Investment Limited, Dipo Aina, however, disclosed that the Association of Stockbroking Houses of Nigeria (ASHON) was looking into the matter.


“We have asked our (ASHON) lawyer to look at the issue and advice us accordingly even though we believe that the two agencies are representatives of the Federal Government,” he said. However, the FIRS had in a statement on its website noted that the major controversial issues had been resolved at an earlier intervention meeting held between FIRS and NIPOST at the office of the Accountant General of the Federation, (AGF) Abuja.


The statement which was signed by the acting coordinating director, Tax Operations Group, (TOG), S. S Ogungbesan, indicated that: “The provisions in the Stamp Duty Act which prescribe that stamp duties on certain categories of documents such as agreements, contract notes among others, could be denoted by adhesive stamps (where duty payment is less than N10) is a demonstration of government concern for cost efficiency achievable through lower compliance cost and minimal cost of administration.


“This arrangement of convenience does not in itself imply the ceding of FIRS stamp duties collection responsibility to any agency. The responsibility for stamp duty collection is solely vested on FIRS. With specific reference to the collection of duties on contract notes, FIRS is to collect all stamp duties payable through the Commissioner of Stamp Duties, while NIPOST engages in the supplies of adhesive stamps where the duty payer excises the option to do so.”  


The FIRS also stated that it was particularly disturbed over the practice whereby NIPOST is engaged in the assessment and collection of contract stamp fees, calculated at the rate of 0.075 percent on value of shares traded, rather than limit itself to the sale of postage stamps.


According to the FIRS, “the rate of 0.075 percent being charged was based on a circular issued by the Securities and Exchange Commission (SEC), rather than the provision of the Stamp Duty Act. FIRS is unhappy about this action of NIPOST in this connection and the issue of multiplicity of taxes that this has generated, thereby further complicating the operating tax environment.” 


(Source: BusinessDay)

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