Following the recent launching of its adhesive stamp, the Federal Inland Revenue Service (FIRS) has issued a press release to provide clarifications on the administration of stamp duties in Nigeria. We have summarized below, the guidelines provided by the FIRS in the publication:
In conclusion, the FIRS reiterated its commitment to make stamp duties the next major source of revenue for funding the Federal Government’s budgetary requirements in the face of dwindling oil revenue.
We commend the FIRS for the timely issuance of the guidelines and providing the much-needed clarity to taxpayers regarding the application and administration of Stamp Duties. With FIRS’ current focus on stamp duties and enforcement drive, it is important that all the stakeholders understand and comply with their obligations under the SDA
Further, with the launch of its adhesive stamp, the FIRS has exercised its power under the Finance Act, 2019, as the only competent authority with powers to impose, charge and collect stamp duties on all dutiable transactions under the SDA. In effect, the NIPOST postage stamps currently used by taxpayers on receipts is not a substitute for the FIRS’ adhesive stamp.
However, whilst the FIRS affirmed that the SDA is the legal basis for the imposition of stamp duties in Nigeria, we noted that some of the rates stipulated in the press release contradicts the provisions of the SDA. For example, while the FIRS in the press release assigned a 0.375% ad-valorem rate to a mortgage, the SDA provides for rates ranging from 0.075% to 0.375% depending on certain conditions. Similarly, the rates provided for receipts, bank cheque per leaflet and a letter appointing an attorney are inconsistent with the rates provided in the SDA. It is obvious that some of the rates adopted by the FIRS originated from the Joint Tax Board Harmonisation of Stamp Duty Rates and Items which, lacking legislative force, cannot be considered an amendment to the Schedule to the SDA. Section 116 of the SDA vests the power to increase, diminish or repeal the duty chargeable on instruments solely on the National Assembly or the House of Assembly of a State, as the case may be. Therefore, the FIRS will be hard-pressed to sustain the validity of the revised rates, which are inconsistent with the provisions of the SDA.
Further, the SDA did not provide specific rates for instruments, such as certificate of occupancy, vending agreement and appointment of a receiver. Therefore, such instruments should be liable to stamp duties at a flat rate of 15 kobo as stipulated in the SDA for contracts that are not specifically charged with any duty.
It is important for the FIRS to review the foregoing issues and update its position to avoid unnecessary dispute with taxpayers during tax review, audit or investigation exercises. On their part, taxpayers should review their records and remediate as necessary, and put measures in place for full compliance as and when they execute a dutiable transaction to avoid interest and penalty on unremitted duties.
Please click here to read the FIRS Press Release.
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