FIRS gives clarifications on collection of stamp duties

Stamp duty is applicable on all dutiable instruments, such as agreements, contracts, receipts, memorandum of understanding, promissory notes, insurance policies and other instruments stipulated in the Schedule to the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria 2004 (as amended) (SDA or “the Act”), the Federal Inland Revenue Service (FIRS) has said.

In a statement made available to National Daily, the FIRS explained that the Finance Act, 2019 has expanded the scope of the SDA to include technology, e-commerce and cross-border transactions, in line with global practice and current economic realities.

“Stamp duty is chargeable on both physical and electronic dutiable instruments, either as a fixed sum or a percentage of the consideration on the instrument.

The FIRS affirms that it is the competent authority to impose, charge and collect stamp duties on all dutiable instruments executed between a company and an individual, while the remit of the State tax authorities (STAs) is limited to collection of stamp duties on instruments executed between individuals.

However, the FIRS is the relevant tax authority to collect stamp duties on all banking transactions, even when the parties thereto are individuals, especially electronic fund transfers.

It said a fixed-rate of N50 FIRS’ adhesive stamp is applicable on all receipts, also, noting that electronic transfers above N10,000 through the Money Deposit Banks (MDBs) will attract a stamp duty of N50 which the MDBs are obliged to remit to the FIRS.

According to the FIRS, the burden of payment of the stamp duties on contracts and bank transfers is that of the beneficiary of the contract and the customer who initiated the transfer, respectively.

“The party making the payment have the obligation to account for the stamp duties applicable on the transaction.  Therefore, ministries, departments, agencies, landlords and other executors are agents of collection for stamp duties purpose and are required to ensure that their service providers, contractors, tenants, etc. pay the applicable duties on the relevant instruments.”