THE NEWLY INTRODUCED STAMP DUTIES PAYABLE ON BANK TRANSACTIONS
MAIN THINGS YOU NEED TO KNOW
On 15th January 2016, the Central Bank of Nigeria, as part of responding to the new economic situation and reality on ground, I mean the drastic fall in the nation’s main source of income, had released a circular directing all deposit money banks and financial institution to commence the charging of fifty naira (₦50) as stamp duties on all receipts given in acknowledgement of services rendered for eligible transactions.
The stamp Duties Act (SDA) imposes stamp duties on ‘receipts’. The Act in section 89 sub –section 1 defines receipts as any note, memorandum or writing whereby any money amounting to four Naira or up warding or any bill of exchange or promissory note for the money amounting to four Naira or upwards, is acknowledged or expressed to have been received or deposited or paid. The provision applies to all companies, wholesalers, retailers and petty traders.
Recently, consultants who claimed to have been engaged by the Nigerian Porter Service (NIPOST) have been writing to companies requesting for an agreed time when they can visit them to conduct an audit into the payment of the applicable stamp duties on their receipts. If you do not forget, NIPOST had in 2013 introduced a fee of fifty Naira (₦50) to be paid as stamp Duties on bank tellers and electronic transfers receipts with values of at least one thousand Naira (₦1000). NIPOST also helped by providing a list of documents considered to be exempted from payment of the stamp duties, this list includes: receiving cheques, drafts and any other negotiable instrument that are already duty stamped.
As we all know, the funds available to the Federal Government had drastically fallen due to the fall in the oil price. As part of the recent efforts by the federal governmentis boost the country’s non-oil revenue base, the CBN via a circular dated 15thJanuary 2016 revisited the issue of stamp duty charge
The CBN therefore directed all depositmoney banks (DMBs) and financial institutions to commence the charging of fifty Naira (₦50) on all receipts issued in acknowledgement of banking transactions on electronic transfers and teller deposit. From one thousand naira (₦1000) and above. The CBN was so in a hurry, not minding the fact that a lot of people are not yet aware, directed that the directive should take effect immediately.
By the circular, the CBN had instructed all DMSs to open an Account which will be designated as NIPOST Stamp Duties Account . All Stamp Duties received will be paid into this account. The CBN is to receive from all the DMBson monthly basis, the charges so collected.
The other financial institutions have been directed to remit their stamp duties collected to any DMS and their choice.
Exemption to the Stamp Duties Banking Transaction.
The circular from the CBN had exempted certain receipts from the stamp duties, they include:
1. Transfer from self to self, whether inter or intra bank i.e. transfer between accounts held by same person
2. Any form of withdrawals or transfer from savings accounts.
What I really want you to know
The imposition of the stamp duties is based on section 89(2) of the SDA which make it mandatory for all receipts to be stamped and evidence of such stamping to be denoted by an adhesive postage stamp. Section 5(2) of the SDA further states that where adhesive stamps can be used to denote the payment of duty, postage stamps may be utilized for that purpose. The above forms the legal basis for the imposition of the fifty Naira (₦50) stamp duty on transactions above one thousand naira (₦1000) as the Nigeria Portal Service Act empowers NIPOST to prescribe the amount of postage stamps.
The CBN is the main regulator of the financial service industry, however, it does not have power to impose or review stamp duties. It is therefore merely directing banks to comply. Any non- compliance should therefore not attract sanctions or fines from the CBN but penalties as stated In the SDA.
Note that the circular provides that the stamp duty charged is to be paid by the receiving accounts only. All employees who receive their salaries via bank accounts would have to bear this as they would be charged when they receive their monthly salaries.
The main issue with this form of taxation is the fact that it is fixed. No matter what amount is involved, the rate remains the same. It is regressive in nature. This tax system is what the previous government tried to discourage with the new personal income Tax Act, whereby the PAYE is graduated base on the income of the tax payer. The higher income earners pay a higher percentage of their income than the low incomes earner. It is not so with this one.
However, considering the reality on ground and considering the available laws on ground, this could just be a starting point as our law makers have a lot to do. Our law must be realistic and should show a directionof where this government of change is really taking us to. We just hope that the government would arise to its responsibility to see to it that all laws of the federation are enforced is the betterment of Nigerians.