…Demands recovery of over four years Stamp Duties backlog
By Moses Adeniyi
As revenue accruing to its purse continues to suffer shortfalls, the Federal Government has sent payment request letters to the Governors of 36 States in Nigeria, requesting compliance with audit and recovery of backlog of stamp duties, spanning about four and half years.
The period under question of which the Federal Government is seeking the recoveries span from January 15, 2016 to June 30, 2020, about a four year and half.
The Government through the office of the Minister of Justice and Attorney General of the Federation, Abubakar Malami, has requested the Governors to direct their respective State Ministries, Departments, Agencies (MDAs), and Regulatory Institutions of Financial Sector to engage and grant access to the appointed Recovery Agents “for the purpose of the Audit and Recovery of Stamp Duty” to ensure that all established liabilities are remitted as appropriate.
Malami, according to a statement released by his Special Assistant on Media and Public Relations, Dr Umar Gwandu, noted that the recoveries were being conducted for the Federal MDAs, and Financial Institutions “and at this stage, liabilities are being established, and no actual recovery has been made.”
According to him, Section 111 of the Stamp Duty Act grants the Attorney General of the Federation an exclusive power to recover any outstanding payment or remittances related to stamp duty.
The letters were written pursuant to the provision of Section 111 of the Stamp Duty Act which provides that “all duties, fines, penalties and debts due to the government of the federation imposed by this Act shall be recoverable in a summarily manner in the name of the Attorney General of the Federation or the State.”
He said that what he did was to activate those powers, conduct the audit and recovery of back years stamp duty in collaboration with stakeholders.
“Others include office of the Accountant General of the Federation, Ministry of Finance, Central Bank of Nigeria, Revenue Mobilization and Fiscal Allocation Commission, among others,” he said.
The letter released on Wednesday read partly: “Pursuant to Mr. President’s approval and directives, I also wish to request Your Excellency to direct the State Ministries, Departments, Agencies, and Regulatory Institutions of Financial Sector to engage and grant access to the appointed Recovery Agents for the purpose of the Audit and Recovery of Stamp Duty to ensure that all established liabilities are remitted as appropriate.”
According to the statement, in view of the need to provide a comprehensive overview of the process and to proper understand the task, the Minister organised a meeting with Attorney General of States.
This, it was said, was for them to have similar powers with respect to stamp duty of Ministries, Departments, Agencies and Financial Institutions in their respective states.
It would be recalled that the Federal Government in August 2020, had declared its support to assist the 36 States in recovering the backlogs of stamp duties in a bid to generate more revenue for the Country.
Malami, had during a virtual meeting with the 36 States’ Attorney-Generals and the Chairman, Federal Inland Revenue Service and the Members of the Joint Task Board called for the support and cooperation of the Attorney-Generals of the 36 states and the Joint Tax Board on the proposed audit and recovery of the backlog of stamp duties from January 15, 2016 to June 30, 2020
The Minister who then cited Section 111 of the Stamp Duty Act, had noted that by Paragraph 7, Item B of Part II of the Second Schedule to the Constitution and Section 4(2) of Stamp Duty Act, the State Governments were empowered to collect stamp duties in respect of transactions between individuals residing in their respective States.
It would be recalled that to facilitate the process, the Federal Government had set up an Inter-Ministerial Committee on the Audit and Recovery of backlogs of stamp duties.
The Committee, Chaired by the Malami, was inaugurated by the Secretary to the Government of the Federation, Boss Mustapha on 30th June, 2020.
Membership of the Committee was drawn from the Federal Ministry of Finance, Budget and National Planning, Office of the Accountant General of the Federation, Secretary to the Government of the Federation, Revenue Mobilization, Allocation and Fiscal Commission, Nigerian Financial Intelligence Unit, Central Bank of Nigeria and Federal Inland Revenue Serve.
The Stamp Duties were originally captured in the Stamp Duties Act 1939 (Ordinance 41 of 1939) and amended by numerous Acts and various resolutions and contained in the Laws of the Federation of Nigeria 2004.
Recently, the Finance Act 2019 amendment to the Stamp Duties Act, particularly Section 52 to 56 clearly defined the responsibilities for the administration of Stamp Duties in Nigeria and jurisdiction of participating taxing authorities. It also explained that the Federal Inland Revenue Service is the competent tax authority to administer, assess, collect, and account for stamp duty in the Country.
Stamp duty is the tax governments place on legal documents, usually in the transfer of assets or property. Governments impose stamp duties, also known as stamp taxes, on documents that are needed to legally record certain types of transactions.
Under the Stamp Duty Act, stamp duty is payable on any agreement executed in Nigeria or relating, whatsoever, to any property situated in or to any matter or thing done in Nigeria.
According to the provisions, instruments that are required to be stamped under the Stamp Duties Act must be stamped within 40 days of first execution.
In Nigeria, Stamp duty is chargeable either at fixed rates or ad valorem (i.e. in proportion to the value of the consideration), depending on the class of instrument. Stamp duty is imposed at the rate of 0.75% on the authorised share capital at incorporation of a company or on registration of new shares.
All deposit banks and financial institutions are required to charge stamp duties of NGN50 on every eligible transaction above NGN 10,000. There are exemptions however, for transactions between accounts held by the same bank customer and for salary accounts.
The 2020 Finance Act has modified section 89(3) of the SDA to remove electronic transfer from the scope of stamp duty and introduced an “Electronic Money Transfer” levy which is applicable on electronic receipts or electronic transfer for money deposited in a financial institution, on any type of account. The applicable levy is N50 on any transfer of N10,000 or more.