Oil Marketers Kick Against N50 Stamp Duty


Thursday, January 09, 2020 /11:15 AM / By CSL Research / Header Image Credit: Legit.ng

Oil marketers across the country have fought back against the payment of N50 for transactions done via POS machines. Oil marketers are resisting the regulatory induced charge under the aegis of Major Marketers Association of Nigeria (MOMAN) following discussions with the Petroleum Pricing Regulatory Agency and the CBN. The resistance of petroleum marketers to the stamp duty charge does not come as a surprise given the tight margins in the downstream business.

We recall that the Central Bank of Nigeria (CBN) released a circular on 17 September 2019 instructing banks and concerned stakeholders to unbundle merchants settlement amounts and charge taxes and duties required on an individual transaction basis. In addition, banks were asked to charge N50 stamp duties for electronic transfers and teller deposits from N1,000. Subsequently, retail outlets including fuel stations passed the cost to customers. However, the CBN has come out to state that the charges were to be borne by the merchants (i.e. supermarkets, malls, fuel stations etc.) rather than the customers.

The argument put forward by the CEO of MOMAN stated that in line with the pricing template of the PPPRA, the dealer gets N2.36 as profit per litre of fuel sold. We note that some of the dealers are middlemen who sell to other fuel stations and thus have to sell at profit of less than N1.50/l in many cases. According to him, an average fuel station sells 100,000 litres of PMS monthly considering most of the fuel stations are located in rural areas. Accordingly, they make roughly N236,000 in net revenue a month which is inadequate to cover operating expenses. He explained that most fuel stations in Nigeria currently operate at significant losses ranging from 5% - 20% depending on level of efficiency.

The argument by the MOMAN group supports our view on the lack of sustainability of the directive. We note that the downstream industry currently operates on severely tight margins which in some cases are as low as 1% per litre. Obviously, the industry cannot afford to take in more pressure on its margins and thus would be better served to be exempted from the directive more so that the price of petrol is regulated by the government. Even retail outlets and many malls have very tight margins and cannot easily raise prices given already depressed consumer pockets.

Proshare Nigeria Pvt. Ltd.

Related to Stamp Duty

  1. Merchants Prohibited From Assessing Any Duty or Costs Characterised As Stamp Duty On Consumers
  2. Government Reviews Stamp Duty Charge
  3. Financial Services Agents Call On CBN To Address Stamp Duty Charges
  4. RMAFC Set to Audit Deposit Money Banks Over Stamp Duty Collections
  5. ASHON Seeks The Abolition Of Contract Stamp Duty In Nigeria's Capital Market
  6. Stamp Duty Under the Banking System
  7. N50 Stamp Duty: Banks begin execution, lists exemptions but still have many issues unanswered
  8. Controversy trails stamp duty collection in stock market
  9. Stamp Duties on Bank Deposits and Transfers: Are There Unresolved Issues?


Proshare Nigeria Pvt. Ltd.

Related to CBN Circular

  1. Demystifying CBN Response to Cashless Scheme Criticism - There is a WRONG way to do the RIGHT Thing
  2. CBN and Banking Charges In Nigeria - A Regulator Gone Rogue?
  3. House Of Reps Urge CBN To Suspend New Charges On Deposits And Withdrawals
  4. How Not To Major in Minor - Key Issues Arising From Recent Cashless Directive
  5.  CBN Approves Charges On Withdrawals And Deposits; Unbundles Charges on Electronic Merchants


Proshare Nigeria Pvt. Ltd.

Related to Federal Competition and Consumer Protection Commission (FCCPC)

  1. Improving Electricity Supply For Consumers in Nigeria - Babatunde Irukera, CEO FCCPC
  2. FCCPC Engages Electricity Consumers in Maiden TownHall Meeting in Ikeja, Lagos
  3. FCCPC To Host Town Hall Meetings With Electricity Consumers in Lagos
  4. Mergers And Acquisitions Now Under The Joint Purview Of SEC and FCCPC, Till Further Notice
  5. SEC, FCCPC Issue Joint Advisory And Guidance On Mergers,Acquisitions and Other Business Combinations


Proshare Nigeria Pvt. Ltd.

Related News - Taxes and Tariffs

  1. Major Tax Events That Shaped 2019 and What To Expect In 2020
  2. FIRS Offers One-Month Window To Ease TCC Issuance
  3. Thoughts on The FIRS Chairman's End of Year Letter To Staffers
  4. Fowler's Fouls: What Tunde Fowler Did Wrong at FIRS
  5. Countdown to Country-by-Country Reporting Filing Deadline for Companies With 31 December Year-end
  6. FIRS Gives 7-Day Notice To Tax Defaulters; To Commence Nationwide Enforcement
  7. Validity of Consumption Taxes Imposed by State Governments in Nigeria
  8. Reminder to File Country-By-Country Reporting Notification
  9. Double Tax Treaty (DTT) In Nigeria - FIRS Clarifies the Rules for Claiming Treaty Benefit
  10. TAT Clarifies The Basis For Computing Interest On Tax Liabilities
  11. ''Illegal'' Taxes: Our Road to Redemption?
  12. Nigeria's Finance Bill 2019 Key Changes and Implications
  13. Why Nigeria Needs To Improve Its Ease of Tax Payments

Proshare Nigeria Pvt. Ltd.
Related News