The Federal Inland Revenue Service (FIRS), has clarified requests by some taxpayers over administration of the Stamp Duties Act in Nigeria.
According to a release by the FIRS titled: “Clarification on the Provisions of the Stamp Duties Act”, in order to provide implementation guidance to taxpayers on various provisions of the Stamp Duties Act (SDA) as amended by the Finance Act, 2019 (the “Finance Act”).
The Finance Act amended the SDA by expanding the scope of instruments liable to stamp duties to include ‘electronic documents. following the amendment, ‘electronic documents’ are now liable to stamp duties such that stamp duties are required to be paid within 30 to 40 days after they have been executed or within 30 days after they have been received in Nigeria (if executed outside Nigeria).
Also the Information circular provides some clarity on what will constitute an ‘electronic document’ and provides for circumstances under which an electronic document, receipt or instrument executed outside Nigeria will be deemed to be received in Nigeria for stamping purposes.
Elucidating on administration of stamp duties, FIRS said it shall be the only Competent Authority to impose charge and collect duties upon instruments where such instruments relate to matters executed between a Company and any person.
“The Stamp Duties Act provides that the relevant tax authority of a state shall collect duties in respect of instruments executed between individuals.
“In respect of banking transactions, the FIRS is vested with the powers to collect stamp duties on all banking transactions.
“As such, the powers given to the State Government through their respective revenue authorities to administer stamp duties by ensuring the assessment, collection and accounting for stamp duties between individuals into the State Government revenue accounts do not include banking transactions.
“A fixed-rate of N50 FIRS adhesive stamp is applicable in respect of all receipts. A N50 stamp duty is also due from customers in respect of electronic transfers done by them through the Money Deposit Banks (MDBs) in Nigeria where the transfer is N10,000 and above. The MDBs have the obligation to deduct and remit the stamp duties due on such transactions.
“Money Deposit Banks shall remit stamp duties collected on behalf of the FIRS into the FIRS Stamp Duties Account with the Central Bank of Nigeria.
“In the case of ad-valorem, the stamp duty is chargeable at the prescribed rates and shall be remitted to the Stamp Duties Account of either the Federal or the State Government.
“Please note that the stamp duties chargeable on all electronic transfers of money (including those initiated by an individual and received by another individual) through any Money Deposit Bank in Nigeria, shall be remitted into the FIRS Stamp Duties Account ONLY,” FIRS said.
The Executive Chairman, FIRS, Muhammad Nami, in a statement said, the government revenue agency is prepared to reposition Stamp Duties and make it the next major revenue source for Nigeria.
He explained further that, “As revenue from oil and gas continues to dwindling due to global fall in demand and price, indirect taxes such as Stamp Duty remain the viable and sustainable alternative revenue source for funding budgetary requirements by the Nigerian Government.
“We hope that the above clarification and information on general or specific clarifications contained in the stamp Duties Act and public Notices by the Service would provide adequate information and guidance for the administration of stamp duties in Nigeria.”