Business

Understanding Stamp Duties

PwC Nigeria/

Stamp duties are taxes levied on specific documents/instruments. These documents and the applicable rates are listed in the Stamp duties Act CAP 58, LFN 2004 (as amended).

Some of these documents include, Agreements, Bank Cheques, Deeds, Insurance policies, mortgage documents etc.

Stamp duties are chargeable on physical and electronic documents. The Schedule to the Act details the exact rate to be applied on different instruments/documents. The rates could be flat or ad-volorem (i.e. rate is a percentage of the instrument/document value).

The Federal Inland Revenue Service is responsible for collecting stamp duties where a company is a party to the transaction, while the relevant state tax authorities are responsible for collecting duties on instruments executed between individuals e.g. tenancy agreement where both parties are individuals.

The Federal Inland Revenue Service recently released a circular reiterating the rights of relevant tax authorities under the Stamp duties Act, compliance obligations of citizens and applicable rates.

Some of these rates were inconsistent with the Act but additional clarity was later provided.

There has also been some confusion between the Federal Inland Revenue Service and the Nigerian Postal Service on the implementation of stamp duty on bank transactions, recently introduced by CBN.

It is expected that the Federal Inland Revenue Service alongside relevant government authorities would subsequently address these inconsistencies.

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