Thursday, May 28,
2020 / 09:02 PM / PwC Nigeria / Header Image Credit: PwC Nigeria
The Finance Act (FA) 2019 introduced some amendments
to the Stamp Duties Act (SDA). The Federal Inland Revenue Service (FIRS) has
issued an Information Circular in this regard. We highlight and analyse the key
- The Circular reproduces some of the amendments to
the SDA, such as the inclusion of electronic documents as instruments liable to
stamp duties, electronic stamping and denoting of documents, and updates to the
definition of certain terms.
- In the circular, the FIRS clarifies that stamp
duties apply on written, printed or electronic dutiable documents and receipts,
and provides examples such as e-mails, short message service (sms), instant
messages (IM), documents on website or cloud-based platforms, POS receipts, and
Automated Teller Machine (ATM) printouts.
- The Circular highlights that instruments can be "stamped" by:
- Employing a die impressed on an
instrument as an adhesive stamp;
- Affixing printed adhesive
stamps issued by the FIRS; o Direct electronic printing or impression on
- Electronic tagging;
- Issuance of stamp duties
- Any other form of
acknowledgement of payment for stamp duties adopted by the FIRS
- The FIRS states that instruments executed outside
Nigeria but received in Nigeria are to be stamped within the period allowed in
the SDA. For electronic documents, 'received in Nigeria' includes where the
document is accessed in or from Nigeria, stored in a device outside Nigeria
which is brought into Nigeria, or stored on a device in Nigeria.
- In line with the amended SDA, a N50 stamp duty is
payable on any bank deposit or transfer of N10,000 or more, except deposits or
transfers between accounts maintained by the same person in the same bank.
- Stamp duties on eligible transactions involving companies,
or between companies and individuals, should be paid to the FIRS. On the other
hand, duties on transactions between individuals should be payable to the
relevant State Internal Revenue Service at rates to be agreed with the Federal
- The Circular prescribes the use of the FIRS' e-portal for the payment of stamp duties. The FIRS has also developed an
Application Programming Interface (API) for corporate bodies and persons upon
request, presumably for automated deduction and remittance of stamp duties.
The indication of FIRS as the agency to collect stamp
duties clarifies the ambiguity regarding the appropriate authority.
However, there are some matters in the circular and
the SDA that need to be addressed. For example, the circular prescribes some
stamp duty rates which are not supported by the SDA, such as tenancy or lease
agreements stated as liable to 6% stamp duties whereas the SDA actually
provides for 0.78% to 6% depending on lease tenure, with 6% applicable on lease
terms that exceed 21 years or are indefinite.
A major issue with the SDA in its current form is the
practicability of enforcing compliance. For example, in the Circular, the FIRS
expects an individual who makes cash payment and receives an electronic acknowledgement
to self-declare the payment on the FIRS' e-platform and pay the necessary stamp
duties. Payment acknowledgments by SMS or WhatsApp also fall into this
category. The Circular also mentions Automated Teller Machine (ATM) printouts
as examples of receipts subject to stamp duties.
The circular states that where an individual views an
electronic document stored outside Nigeria on a device in Nigeria, is "received" in Nigeria and is liable to stamp duties. The practical application
of this is doubtful and even where the FIRS attempts to enforce this, taxpayers
may challenge the FIRS' definition of the term, as the Act itself does not
provide a definition.
It will be useful to amend the SDA to define the term 'received in Nigeria' in a practical manner to give it necessary legal backing
and simplify compliance.
While the Circular encourages the payment of stamp
duties via the FIRS' e-platform, there have been complaints that the platform
does not facilitate bulk remittance of stamp duties, as the platform only
allows individual stamping of documents. The FIRS should address this.
In general, the SDA (enacted in 1939) needs to be
repealed and re-enacted to be in tune with modern day business and economic
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