Monday, December 05, 2016 8.12 AM / PwC Nigeria
Sometime in 2013, the Nigerian Postal Agency [NIPOST] entered into an agreement with an agent to collect from banks, the sum of N50 as stamp duty on all receipts including electronic bank transfers and teller deposits of N1,000 or more.
The parties agreed the new rate on the basis that the Stamp Duties Act (which imposes N1.50k for receipts with a value of not less than N40) had been amended by a ‘Federal Government Financial Regulations 2009’ [Regulations].
Many of the banks argued that the amendment was not in line with the law and therefore refused to charge and remit the N50 stamp duty to the agent. To compel compliance the agent successfully sued all 22 banks at the Federal High Court.
In another suit, the agent also successfully sued the Central Bank of Nigeria [CBN], directing the CBN to compel the banks to comply with collection of the stamp duties.
Following the decision, the CBN issued a circular directing banks to comply.
Dissatisfied with the earlier decision, one of the banks challenged the decision at the Court of Appeal. Court of Appeal decision In April 2016, the Court of Appeal (CoA) reversed the FHC decision and held, amongst other things, that:
1. receipts given for monies deposited in the bank were exempt from stamp duties by virtue of Schedule 4 to the Stamp Duties Act;
2. electronic funds transfers and teller deposits were not receipts on which stamp duty should be charged; and
3. there was no amendment to the Act therefore the agent had no legal right to sue.
The CoA’s decision appears to have resolved, for the time being, the dispute on imposition and collection of stamp duties on bank deposits and electronic transfers. Therefore, in the absence of a contrary decision by a higher court, banks are no longer required to impose stamp duties on these transactions.
Following this, it is expected that the CBN would issue another circular in line with the Court’s decision.
Amendment of tax laws, like any other law, should follow due process otherwise taxpayers and other stakeholders are well within their rights to challenge any irregular imposition of taxes or levies.
For a deeper discussion, please contact any of the persons below at PwC Nigeria:
· Taiwo Oyedele +234 1 271 1700 Ext 50002 firstname.lastname@example.org
· Agnes Osiyemi +234 1 271 1700 Ext 54021 email@example.com
· Folajimi Akinla +234 1 271 1700 Ext 52008 firstname.lastname@example.org
· Stanley Dike +234 1 271 1700 Ext 50056 email@example.com