Friday, July 08, 2016 2.43PM / June 24, 2016 Contributed by TRLPLAW
Stamp duty charges
Under the Stamp Duties Act (Cap S8, Laws of the Federation of Nigeria 2004) and the Federal Government Financial Regulations 2009, deposit money banks must charge their customers stamp duty on eligible transactions.
Under the relevant legislation, eligible transactions are to be charged N50 as stamp duty. Eligible transactions are amounts of N1,000 or more deposited into current accounts. The N50 charge must be borne by the receiving bank account.
In a January 15 2016 circular the Central Bank of Nigeria (CBN) directed all deposit money banks to commence charging their customers N50 in stamp duty charges per eligible transaction. This followed the landmark judgment in Suit FHC/L/CS/1710/2013.
Each deposit money bank must open a Nigeria Postal Service (NIPOST) stamp duty account into which it can pay all charges collected. The balance from the account is to be transferred on a monthly basis into a CBN NIPOST stamp duty collection account. Other financial institutions must remit stamp duty collection to a deposit money bank of their choice.
Stamp duty payments are due to NIPOST under the Stamp Duties Act. The moneys generated from the charges are to be remitted to NIPOST through Kasmal International Services Ltd, a private company.
Due to dwindling revenues as a result of the decline in the price of oil, the federal government is looking at new avenues to raise money. During 2016 the government is expected to raise N66 billion ($331 million) from stamp duty charges, and this revenue is expected to grow to around N71.8 billion in 2017 and N78.5 billion in 2018.
The following transactions are exempt from stamp duty charges:
Many Nigerians are unhappy with the stamp duty charge, as it represents an additional charge for banking transactions. Bank customers expected to enjoy relief from bank charges when the CBN ordered banks to stop charging commission on turnover for bank transactions as of January 2016. However, the new stamp duty charge now applies to banking transactions alongside the account maintenance fee.
The combined effect of Section 89 of the Stamp Duties Act and Section 620 of the Financial Regulations 2009 appears to give legitimacy to the collection of stamp duty charges. However, the deposit money banks challenged the matter in court through an appeal to the Court of Appeal.
The Court of Appeal delivered its judgment in April 2016, holding that:
The case is poised to go all the way to the Supreme Court. Kasmal has challenged the Court of Appeal's decision, seeking an order setting aside its judgment and affirming the trial court's judgment on the following grounds:
The Supreme Court case will test existing statutes and the federal government's need to raise revenue in a difficult economy. The final outcome will be a watershed moment in the Nigerian banking and financial services sector.