Stamp Duties are basically taxes paid to the Federal or State Government on documents (also known as instruments for the purpose of the Stamp Duties Act) such as Conveyances on Sale, Bills of Exchange, Promissory notes, Agreements, Contracts or even Documents, including but not limited to Letters and Certificates of Admission, Instruments of Apprenticeship, Insurance Policies etc[1].
The payment of Stamp Duties is backed up by the law being the Stamp Duties Act 2004[2] (as amended by numerous Acts)
The legal effect of a document which is duly stamped according to Section 19 of the Stamp Duties Act[3] is basically that it will be admissible in evidence in a Court of Law. This excludes documents given as evidence in criminal proceedings and all such exceptions on other legal grounds. See Section 22 (1)&(4) Stamp Duties Act[4].
In relation to the legal rights to the collection process of all stamp duties, Section 4 (1)&(2) of the Stamp Duties Act[5] empowers the Federal and State Government to impose, charge, and collect stamp duties in different circumstances. The Federal Government has the sole authority to impose charge and collect Stamp
Duties in respect of documents relating to matters between a Company and an
individual, group or body of individuals. Therefore, for documents executed between Companies with any of those mentioned above, the place to go is the Federal Internal Revenue Service.
Note that the keyword here is “Company” which extends to banks and other financial institutions[6].
Section 4(1) of the Stamp Duties Act[7] provides that:
“The Federal Government shall be the only competent authority to impose, charge and collect duties upon instruments specified in the schedule to the Act if such instrument relates to matters executed between a company and an individual group or body of individuals.”
The State Government on the other hand has authority to collect Stamp Duty in respect of documents executed between individuals or persons at such rates imposed or charged as agreed with the Federal Government. Such Stamp Duty should be paid to the State Internal Revenue Service[8].
It therefore means that the duty chargeable is not at the discretion of the State Government or as imposed by the Federal Government but same is as empowered by the 1999 Constitution[9]. More so Stamp Duties is one of the matters reserved to the Federal Government in the Exclusive Legislative List[10].
The various forms of Stamp as permitted by law include adhesive stamps, postage stamps, impressed or embossed stamps by the means of a die, that is plate tool or instrument[11]. These impressions are usually on the face of the document.
However, where an Instrument is not duly stamped within the time limit authorized by law, the person liable to a penalty shall be guilty of an offence and liable on conviction to payment of the unpaid duty and a fine of twenty naira and where the unpaid duty exceeds twenty naira there is a further penalty or interest on such duty at the rate of ten percent per annum from the day on which the document was first executed up to the time when the amount of interest is equal to the unpaid duty. For ad valorem duty, a further penalty equivalent to the unpaid duty in addition to the penalty stated above shall be paid unless a reasonable excuse for the delay is provided to the satisfaction of the Commissioner, court arbitrator or referee before whom it is produced.
Furthermore, the Federal Inland Revenue Service, by virtue of Section 25(1) of the Federal Inland Revenue Service (Establishment) Act[12] and Section 4(1) of the Stamp Duties Act, 2004[13], is the only competent authority to collect duties on instruments specified in the schedule to the Act, if such instruments relate to matters executed between a company and an individual, group or body of individuals.
On the issue of Stamp Duties involving individuals, the power to legislate on Stamp Duties matter is the prerogative of the National Assembly, but the administration of it belongs to the respective States of the Federal Republic of Nigeria.
The power of the Governor and the State under the relevant provisions of the Stamp Duties Act are as provided for in Section 4(2)[14] , Section 5(1)[15], Section 6(1), (2) & (3)[16] of the Stamp Duties Act.
Without prejudice to all the above, Section 115[17] of the Stamp Duties Act provides that “in addition to the powers conferred on him by section 15[18] and 105[19] of this Act, the President and the Governor of a State may make regulations relating:
- To the custody of the dies to be used under this Act;
- To the circumstances in which allowance shall be made for spoiled stamps;
- To the accounting for the revenue derived from stamp duties;
- To the substitution of adhesive stamps or of impressed stamps for adhesive stamps, or of revenue stamps for postage and revenue stamps;
- To the manner in which and the persons by whom impressed stamps shall be affixed to documents; and
- To the further and better carrying into effect of the objects and purposes of this Act”.
Section 116 (2)[20] states that “the House of Assembly of a State may by resolution increase, diminish, or repeal the duty chargeable under any of the head specified in the Schedule in respect of document regarding which the Government of State is exclusively competent may add new duties or otherwise add to vary or revoke the schedule”.[21]
In the bid of the 8th National Assembly to amend the Stamp Duties Act[22], both houses passed the Stamp Duties Act (Amendment) Bill, 2018 and same was sent to the President Muhammad Buhari for assent.
In refusing to give his presidential assent to the Stamp Duties Act[23] (Amendment) Bill, 2018, President Muhammad Buhari stated inter alia that “revenue from stamp duties are currently shared among all three ties of government. Accordingly, transferring collection responsibilities from the Federal and States’Inland Revenue Services to the Nigerian Postal Services may deprive the States and Local Governments of their share of stamp duties revenue”.[24]
Further to the above, President Muhammad Buhari also said that “the Bill’s proposals for the imposition of stamp duties on savings accounts and electronic transactions may impair the implementation of the Federal Government’s Financial Inclusion Strategy, e-payment programmes and cashless banking policies”.[25]
In the Stamp Duties Act[26] (Amendment Bill) 2019 that was refused assent by the President, Section 89 (1) provides that:
“For the purposes of this Act, all income from the denotation of receipt, document or instrument with postage stamp shall be known as Stamp Proceeds.”
With due respect to our law makers, revenue duties accruing from stamp duties cannot be part of the proceeds or business activities of the Nigeria Postal Service (NIPOST)[27].
The functions of NIPOST are well captured in Section 4 of the Nigeria Postal Service Act[28] which includes, inter alia, to develop, promote and provide adequate and efficiently coordinated and economic postal services at fair and reasonable rates and fees; to maintain an efficient system of collection, sorting and delivery of mail nationwide; to provide various types of mail services to meet the need of different categories of mail users; to establish and maintain postal facilities of such character and in such location consistent with reasonable economics as will enable the generality of the public to have ready access to essential postal services.
It is in the efforts of NIPOST in trying to explore additional sources of postal revenue that they have thus, in collaboration with, perhaps some law makers and the Central Bank of Nigeria, now seek to be in charge of collection of electronic Stamp Duties payment collection.
One big question that the Federal law makers need to answer is whether or not all the concerns raised by Mr. President in refusing to assent to the 2018 amendment Bill has been duly addressed? Unfortunately, the answer to the above question is in the negative. If that mischief in the Stamp Duties[29] (amendment) Bill has not been cured, I am of the firm opinion, that this current 9th Assembly is seeking to compel Mr. president in giving assent to an already rejected bill simply because should the president reject this Stamp Duties Act[30] (Amendment) Bill now being sought to be passed same would mean that the planned intent of the Federal Government to increase the rate paid as stamp duties from 5% to 7.5% would fail and since the Federal Government is so desirous of having the bill passed they would use that as a bait in compelling Mr. President to give assent to their bid to transfer everyone’s national heritage into the coffers of NIPOST.
Secondly, does the law makers and NIPOST know the implications it would have on the Nigeria grundnorm, the 1999 Constitution of the Federal Republic of Nigeria[31] of bequeathing to NIPOST the collection of electronic stamp duties without first amending the 1999 Nigerian Constitution, particularly Section 163?
Section 163 of the 1999 constitution of the Federal Republic of Nigeria (as amended), provides that:
“Where under an Act of the National Assembly, tax or duty is imposed in respect of any of the matters specified in item D of Part II of the Second Schedule to this Constitution, the net proceeds of such tax or duty shall be distributed among the States on the basis of derivation an accordingly –
(a) where such tax or duty is collected by the Government of a State or other authority of the State, the net proceeds shall be treated as part of the Consolidated Revenue Fund of that State;
(b) where such tax or duty is collected by the Government of the Federation or other authority of the Federation, there shall be paid to each State at such times as the National Assembly may prescribe a sum equal to the proportion of the net proceeds of such tax or duty that are derived from that State”.[32]
Thus, where the net proceeds of such tax (Stamp Duty inclusive) are collected, it shall be treated as part of the consolidated revenue fund of the Federation or State. The National Assembly does not have the powers to transfer the revenue accruing to a State on NIPOST without the approval of two/third States of the Federation.
Where then lies the wisdom of our law makers in the law making process to seek to empower NIPOST to forthwith collect electronic stamp duties from banks and companies, such that they are to remit all such proceeds to NIPOST.
Except the President is timeously warned against subject himself into any NIPOST and the National Assembly’s blackmail by not assenting to any bill that seeks to give NIPOST the legal rights in the electronic stamp duties collection, a constitutional crisis is imminent.
I humbly submit, that it is either due to sheer ignorance on the part of all the Legislatures in the law making of the Stamp Duties Act[33] (Amendment) Bill 2018 or same was due to political and/or financial mischief or even laziness on the part of all and/or some of the law makers who instruments the passage of same.
Section 53 of the Nigerian Postal Service Act[34] provides that:
“The Board may apply the fund established under section 52 of this Act –
![](https://legaldeskng.com/wp-content/uploads/2024/08/LegaldeskNG-WhatsApp-Channels.jpg")
- To the cost of administration of the Postal Service;
- Remuneration, fees and allowances of the members of the Board of the Postal Service;
- To the payment of the salaries, fees and other remuneration, allowances,
pensions and gratuities payable to members or employees of the Postal Service.[35]”
Worthy of note is the fact that pursuant to Sections 52 and 53 of the Nigerian Postal Services Act[36] such stamp duties funds collected by NIPOST are hence part of postal services funds and not funds meant for the Federation, which negates the provisions of Section 163 of the 1999 Constitution[37] which is the ground norm of this country.
Since the Court of Appeal had since April 2016, in the case of STANDARD CHARTERED BANK NIGERIA LIMITED V. KASMAL INTERNATIONAL SERVICES LIMITED & 22 ORS [38] held that “electronic funds transfer and teller deposits were not instruments within the contemplation of the provisions of the Stamp Duties Act and the Nigeria Postal Services does not have the power to impose and collect stamp duty on such transactions, the Federal Law Makers and NIPOST and their various advisers should not engage in an exercise in futility as any attempt to transfer to NIPOST the rights and powers to be the collecting authority for electronic stamp duties same would be an exercise in futility as same would be strenuously challenged by well meaning individuals”- myself inclusive.
The position of the Court of Appeal was followed in a subsequent case of RETAIL SUPERMARKET LIMITED V. CITIBANK NIGERIA & CENTRAL BANK OF NIGERIA (SUIT NO. FHC/L/CS/126/2016)[39] where the Federal High Court on Monday 13th March, 2017 nullified the imposition of stamp duties on bank transactions within the threshold of N1000 and above.
The above relevant judgments by the Court of Appeal and the Federal High Court both being superior courts of record therefore rendered as null and void and of no legal effect, the Central Bank of Nigeria’s[40] circular No. CBN/GEN/DMB/02/006[41] issued on 6th January, 2016.
It was therefore in a bid by both NIPOST and CBN, and other persons of interest to make of no effect the above court judgments that preempted the moves to amend the Stamp Duties Act[42].
Stamp Duties derivation, as far as the 1999 Constitution[43] is concerned, cannot be amended except in compliance with the provisions of Section 9(2)&(3) of the 1999 Constitution of Nigeria[44], which requires at least 2/3 of the Federation States Houses of Assembly give their assent to whatever such amendments the National Assembly makes.
If I may be permitted to ask this pressing question to wit: can the passage of the Stamp Duties Act[45] (Amendment) Bill 2018, by necessary implication amend section 163 of the 1999 Constitution[46] ? The answer to the above question is AFFIRMATIVE NO .
CONCLUSION
It is clear that Government is seeking to legalize the current practice of charging stamp duties on bank deposit as well as expand the scope of the stamp duties act to cover electronic and other transactions. It has been estimated in some quarters that the stamp duties could generate over N2 Trillion annually for the government. If and when the bill is passed, it will have significant impact on individuals and businesses in terms of higher financial and administrative cost of doing business. In any case, if the bill is passed into law, it cannot be enforced retrospectively to reverse the court judgment that makes it illegal for banks to charge N50 but will take effect from the date of enactment[47].
Isaac Omuta Ogbah, FICMC. (Barrister & Solicitor of the Supreme Court of Nigeria) Writing from Ota, Ogun State, Nigeria.
[1] Dolapo Ajayi, http://www.detailsolicitors.com/media/archive1/articles15, last accessed on 7th August, 2019.
[2] Section 4(1)&(2), Stamp Duties Act, Cap S8, LFN 2004
[3] Stamp Duties Act, Cap S8, LFN 2004
[4] Stamp Duties Act, Cap S8, LFN 2004
[5] Cap S8, LFN 2004
[6] Section 4 (3) Stamp Duties Act, Cap S8 , LFN 2004
[7] Cap S8 LFN 2004
[8] Section 4 (2) Stamp Duties Act, Cap S8, LFN 2004
[9] Section 163 Constitution of the Federal Republic of Nigeria (as amended) 1999
[10] Second Schedule, Part 1, Constitution of the Federal Republic of Nigeria (as amended) 1999
[11] Section 5 Stamp Duties Act, Cap S8, LFN 2004
[12] Section 25 (1) of the Federal Inland Revenue Service (Establishment) Act, 2007 provides that “the Service shall have power to administer all the enactments listed in the First Schedule to this Act and any other enactment or law on taxation in respect of which the National Assembly may confer power on the Service.”
[13] Cap S8, LFN 2004
[14] Stamp Duties Act, Cap S8, LFN 2004
[15] Stamp Duties Act, Cap S8, LFN 2004
[16] Stamp Duties Act, Cap S8, LFN 2004
[17] Stamp Duties Act, Cap S8, LFN 2004
[18] Stamp Duties Act, Cap S8, LFN 2004
[19] Stamp Duties Act, Cap S8, LFN 2004
[20] Stamp Duties Act, Cap S8, LFN 2004
[21] Oyesola Animashaun, Changing Perspectives in the Law and Practice of Taxation in Nigeria: Stamp Duties in Nigeria : Issues, Controveries and Prospects, Hybrid Consult & College of Law, Kwara State University, pages 32 – 34.
[22] Cap. S8 LFN 2004
[23] Cap. S8 LFN 2004
[24] Premiuntimesng.com , Buhari gives reasons for rejecting bills passed by National Assembly by Queen Esther Iroanusi, published on October 10, 2018, last visited on 10th December,2019.
[25] Supra, Premiumtimesng.com.
[26] Cap. S8 LFN 2004
[27] Shall hereinafter be referred to NIPOST wherever the context so applies.
[28] Cap. L127 LFN 2004
[29] Cap. S8 LFN 2004
[30] Cap. S8 LFN 2004
[31] Cap. C23 LFN 2004
[32]Constitution of the Federal Republic of Nigeria, 1999 (as amended), Cap C23 LFN 2004
[33] Cap S8 LFN 2004
[34] Cap L127 LFN 2004
[35] Nigeria Postal Service Act, Cap L127 LFN 2004
[36] Cap L127 LFN 2004
[37] Constitution of the Federal Republic of Nigeria (as amended) 1999, Cap C23LFN 2004
[38] Ozor Chinedu, STANDARD CHARTERED BANK NIGERIA LIMITED V. KASMAL INTERNATIONAL SERVICES LIMITED & 22 ORS (SUIT NO. CA/L/437A/2014) delivered on 21st April, 2016, www.dcsl.com.ng, last accessed 10th August, 2019.
[39] Ozor Chinedu, RETAIL SUPERMARKET LIMITED V. CITIBANK NIGERIA & CENTRAL BANK OF NIGERIA (SUIT NO. FHC/L/CS/126/2016) on delivered on Monday 13th March, 2017, www.dcsl.com.ng, last accessed 10th August, 2019.
[40] Hereinafter referred to as Central Bank of Nigeria.
[41] Central Bank of Nigeria, 15th January, 2016, http://www.cbn.gov.ng/out/2016, last accessed on 16th August, 2019.
[42] Cap S8 LFN 2004
[43] Constitution of the Federal Republic of Nigeria (as amended), Cap C23 LFN 2004.
[44] Constitution of the Federal Republic of Nigeria (as amended), Cap C23 LFN 2004.
[45] Cap S8 LFN 2004.
[46] Constitution of the Federal Republic of Nigeria (as amended), Cap C23 LFN 2004.
[47] https://pwcnigeria.typepad.com/files/pwc-tax-alert_significant-changes-to-the-stamp-duties-act. last accessed on 15th August, 2019
