The Nation Newspaper

Tag: stamp duty

  • Senate demands full disclosures in probe of Stamp Duty collection

    Senate demands full disclosures in probe of Stamp Duty collection

    The Senate has launched a far-reaching investigation into stamp duty collections said to run into trillions of naira, demanding full disclosure from commercial banks, the Central Bank of Nigeria (CBN), the Federal Inland Revenue Service (FIRS), and state governments.

    Chairman of the Senate Public Accounts Committee, Senator Ahmed Aliyu Wadada, who gave this indication during a press briefing in Abuja, said the move followed concerns over what he described as “humongous” sums generated from stamp duty between 2016 and 2024, much of which remains unaccounted for.

    “It is one thing to generate revenue and another to ensure it is judiciously utilized,” Wadada said.

    “The legislature cannot afford to look the other way when trillions are at stake.”

    He said the committee has written to all commercial banks to submit detailed records of stamp duty collections and remittances for the eight-year period.

    It has also asked the CBN to provide corresponding data on what the banks remitted and what the apex bank transferred into the Treasury Single Account (TSA).

    Read Also: FG issues 23 refineries ‘license to establish’ in four years

    Similarly, he said letters have been sent to the FIRS to account for stamp duties collected on government and private sector agreements, and to the Nigerian Governors’ Forum, chaired by Kwara State Governor AbdulRahman AbdulRazaq, to disclose proceeds received by the states.

    “We want to know what is where, and how effectively it has been used,” Wadada said.

    “This is about accountability and ensuring every kobo collected on behalf of Nigerians is properly tracked.”

    He added that the committee had received preliminary data from consultants but would wait to reconcile all submissions before making its findings public.

    “We have a fair idea of what’s involved,” he said. “But we’re verifying every figure. Once that’s done, we’ll not hesitate to summon anyone necessary to explain discrepancies.”

    He said that all concerned agencies have until November 25, 2025, to respond to the Senate’s requests.

    “This administration has shown commitment to transparency.

    “Our job is to make sure that the revenues it depends on are fully accounted for and effectively utilised for the benefit of Nigerians,” Wadada said.

  • FIRS rakes in N309b from stamp duty

    FIRS rakes in N309b from stamp duty

    The Federal Government has realised a total of N309.449 billion as stamp duty collection.

    The amount covered between January 2016 and last month.

      So far, the revenue-collecting agency has exceeded its stamp duty target by close to N3 billion.

    According to documents available to The Nation, in 2016 the Federal Government realised N5.63 billion; in 2017, N10.94 billion and in 2018, N17.36 billion.

    In 2019 the FIRS collected N18.19 billion as stamp duty proceeds; in 2020, N120.16 billion; 2021 N44.46 billion and 2022, N45.57 billion.

    The document indicated that included in the 2020 collections is the N50 stamp duty on electronic transactions warehoused at CBN from 2016 – 2020, totalling N59.35 billion.

    Also included in the 2020 collection was N37.67 billion being stamp duty on electronic transactions for that year following its introduction in the Finance Act 2020.

    A source connected to the stamp duty revenue collection exercise disclosed that stamp duty budget for 2023 was N44.47 billion but as at August 2023, FIRS has collected N47.15 billion.

    Read Also; Dollar shortage and the economy

    The source also disclosed that the N262.30 billion realised from January 2016 to last December has been shared among the three tiers of government.

    “What is left for sharing from stamp duty collection is what will be harvested in 2023,” he added.

    The Stamp Duty Act states that the “collections shall be disbursed in the following manner among the named entities and persons: The Federal Government of Nigeria – 14 per cent continuously; the Nigeria Governors’ Forum – 73 per cent continuously; FIRS – four per cent continuously, the coordinating Consultants – five per cent (one off) the Federal Government Legal Team – two per cent (One off); School of Banking Honours and Others – two per cent (One off)”.

    Chargeable Transactions are: Power of Attorney (PoA), Deed of Assignment, Certificates of Occupancy (C of O), Sales Agreement, Proxy forms, Appointment of Receiver, Legal Mortgage or Debentures, Tenancy or Lease Agreements, Memorandum of Understanding (MoU), Insurance Policies, Joint Venture Agreements (JVA), Contract Agreements, Guarantor’s form, Vending Agreement, Ordinary Agreements Receipts, Promissory Notes, Charter-Party and Contract Notes

    Stamp duties in Nigeria is a tax charged on physical and electronic instruments.

    The Stamp Duties Act governs the administration of stamp duties, and it has undergone several amendments over the years to accommodate changes in business transactions such as e-commerce and cross-border transactions.

    The most recent amendment was the Finance Act of 2019, which clarified responsibilities for the administration of stamp duties, with the Federal Inland Revenue Service (FIRS) being the sole competent tax authority to assess, collect and account for stamp duty in Nigeria.

    Chargeable transactions for stamp duties include ad-valorem instruments and fixed duty instruments.

    Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, stated that the collection performance of Stamp Duties is only a small fraction of its potential.

    However, by amending and effectively implementing the Stamp Duty Act, streamlining administrative processes, and conducting audits and recovery exercises, Nami assured that “there will be a significant increase in its efficiency”.

    One of the reasons for the low collection performance in the past is the reliance on postage stamps to denote Stamp Duties.

    Nami argued that “the introduction of the FIRS Stamp Duties Adhesive Stamp will, among other things: plug the revenue sink-hole, enable proper accountability and transparency, simplify administration of Stamp Duties, and reduce disputes”.

  • Stamp duty charge is fraudulent, says NECA

    Nigeria Employers’ Consultative Association (NECA) said the imposition of and collection of stamp duty is illegal and fraudulent.

    It therefore advised the Federal Government to urgently direct the Central Bank of Nigeria (CBN) and the Nigerian Postal Service (NIPOST) to respect valid court judgment and stop   defrauding millions of bank customers in the name of deduction of stamp duties from their accounts.

    Its Director-General, Mr. Timothy Olawale, said the issue of imposing N50 stamp duty commenced when the CBN directed that banks must deduct N50 stamp duty on all transactions made with a value of N1,000 and above.

    Olawale said: “The issue of stamp duty was tested in courts and a ruling was obtained in an appeal against the lower court judgment in the case of Standard Chartered Bank Nigeria Ltd vs. Kasmal International Services Ltd & 22 Ors in CA/L/437A/2014, when Hon. Justice Ibrahim Saulawa and four other Justices of the Court of Appeal held that the Stamp Duties Act did not impose a duty on Money Deposit Banks to deduct N50 on bank deposits.

    “Thus, according to the Appeal Court, electronic transactions were not covered by the Stamp Duties Act.

    “To the best of our knowledge, there was no challenge of this ruling by any party at the Supreme Court.”

    Olawale said the refusal of the CBN and NIPOST to respect a valid judgment of a competent Court of the land is worrisome, adding that it amounts to contempt of court and sustained daylight robbery of millions of bank customers’ deposits.

    “It is a mark of disrespect to the Constitution of Nigeria, disrespect to the court, disrespect to due process and disrespect to Nigerians. In fact, NECA had written letters in 2015 and 2017 to the CBN Governor, calling his attention to the anomaly and judgment of the court which he neither responded to nor did the needful by halting the fraud and rip off,” he said.

  • RMAFC to recover N100b stamp duty funds from banks

    COMMERCIAL banks are to be probed over stamp duty collections, the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has said.

    A statement by the Commission’s spokesperson, Ibrahim Mohammed, said the probe would involve a forensic investigation of the funds collected as stamp duty by 22 Deposit Money Banks (DMB) between 2000 and last year.

    RMAFC is the only constitutional body vested with the powers to monitor all revenue accruals into the Federation Account.

    The statement reads: “The commercial banks have been deducting the sum of N50 on every deposit with a value of N1, 000 and above since January 2000. At the moment, the total sum of N33 billion has been realised through the collection of stamp duties which falls far below the expectation of stakeholders. It is expected that at the end of the exercise, over N100 billion would be recovered.

    Read also: Senate refers nominated RMAFC members to committee for screening

    “Arrangements have been made to engage the services of reputable forensic audit firms to carry out the probe of the banks. The probe will be comprehensive as it will cover the affixed stamp used on cheque books prior to the introduction of electronic transactions.”

    In the same vein, the Commission observed that “if NIPOST is properly repositioned through appropriate legal and regulatory framework and the introduction of appropriate technology, the Agency can generate over N500 billion.”

    RMAFC appealed to the National Assembly and the Federal Government to initiate measures for the amendment of the NIPOST Act to enable it to expand the economy and attract more revenue.

    Besides the planned probe, RMAFC has also embarked on the reconciliation of signature bonuses and other miscellaneous revenues from the oil and gas industry “to enable the Commission engage other stakeholders with a view to reducing revenue leakages and enhance remittance into the Federation Account.”

    The Commission has approached other stakeholders, especially the Department of Petroleum Resources (DPR), the Federal Inland Revenue Services (FIRS) and the Central Bank of Nigeria (CBN) for support.

  • Stamp duty: NIBSS as Nigeria’s supra-state?

    Until my colleague Segun Ayobolu’s April 21 piece appropriately titled Stamp duty impunity, I could have sworn that the managers of the national economy have  finally rid the system of the more manifest oddities in our public finance system.  What with the operations of the Treasury Single Account and its clean sweep of every kobo of public revenue from the filchy hands of officials into the national coffers.  Yours truly was one of those who celebrated the measure designed to snuff the life out of the islands of mini-governments operating as parastatals; entities whose expenditure outlays, sometimes exceeded those of states, and yet couldn’t be bothered by the niceties of parliamentary appropriation not to talk of remitting their operating surpluses to the national coffers.

    You know the familiar culprits – the mini-federations within the Nigerian state. For obvious reasons, I will leave out the apex bank – which insists on conflating autonomy with independence and so believes erroneously that it could dispense as much as it pleases from the piggy bank.

    That cannot be said of the national oil corporation – the Nigerian National Petroleum Corporation – that one that routinely sends the crumbs to the national exchequer only after it has had its fill. Or the Nigerian Ports Authority (NPA), a behemoth which although spins billions if not trillions but ensures that nothing ever gets pass the gatekeepers – until perhaps when our lawmakers on self-help sorties, come calling for them to open the tap. Then is the Nigerian Maritime Administration and Safety Agency (NIMASA), which until recently ran errands for a certain Tompolo and other big boys from the Niger Delta rather than attend to its primary business of tending the country’s blue economy.

    TSA which ensures that every kobo of public fund is captured and pooled into the piggy bank is supposed to have changed all of that. Unfortunately, we may have failed to reckon with the cowboys in the financial services sector – smart Alecs trained in the art of subversion, of whom no rules are held as sacrosanct and niceties of transparency and fair-play are luxuries to be cynically dispensed with.

    Thanks to Ayobolu’s illuminating piece, we ought to by now, know better than to ignore the cabal of ruthless operatives. Let me refresh if only in the interest of those who did not read the piece and the report he alluded to. To paraphrase Ayobolu, the story in two parts started when a certain Nigerian, Tola Adekoya, saw an opportunity in the then moribund Stamp Duties Act, 2004. His outfit, the School of Banking Honours (SBH), SBH then approached the Nigerian Postal Services (NIPOST) on April 20, 2012, to see how it could partner with it to boost its internally generated revenue by affixing adhesive stamp on banking receipts as provided for in the law. Armed with a Masters Services Agreement with NIPOST on September 14, 2012, SBH then approached the Central Bank of Nigeria (CBN) for authorization to engage Deposit Money Banks (DMBs) and other qualified institutions as collecting agents. The apex bank, convinced of the immense possibilities in the partnership, gave the nod On December 3, 2012. Then, on October 15, 2015, the Nigerian Copyright Commission (NCC) issued the SBH a Copyright Certificate (No. LW1023) affirming its copyright ownership of the initiative on stamp duty collection.

    As Ayobolu would further have us know, the Nigeria Inter-Bank Settlement System (NIBSS) collected the stamp duty on all cheques with a value above N500,000 something it had done since 1993, although there was no evidence it remitted same into the federation account as required by law. With SBH came the expansion of the scope of the Stamp Duty to encompass all gamut of banking transaction ranging from manual to e-transfers.

    Today, SBH reckons that the unremitted revenue to the Federation Account is in the region of N20 trillion – monies which ought to have been remitted into the distributable pool to be shared between the federal, states and the local governments. Call it double jeopardy if you may –not only is the federation account denied access to the huge fund probably lying idle somewhere, the agents – SBH is equally denied fruits of its toil. And to imagine what difference the huge funds could make at a time of unprecedented infrastructure deficit.

    The good news: the president has since directed the monetary authorities to collect every kobo and remit same into the federation account. The directive is said to cover – SBH, the labourers for their toil. The bad news is that the president’s express directive, which traverses the whole gamut of constitutionalism, sanctity of contracts and proprietary interests, has not been carried out.

    That was the summary of the story as told by my colleague.

    So where is the money? Could the money be with the individual banks – the collecting agencies or their alter ego, NIBSS through which all transactions must necessarily pass through? Does that in any way confer the custodial role on a private company? And under what authority? Would that not strike a dart at the heart of the TSA?

    To be sure, we know what NIBSS does – it holds the franchise for inter-bank payments in order to remove potential bottlenecks associated with inter-bank funds transfer and settlement. That is what their website says. A limited liability company owned by all licensed banks including the Central Bank of Nigeria (CBN), it operates the Nigeria Automated Clearing System (NACS) which facilitates the electronic clearing of cheques and other paper based instruments, electronic funds transfer, Automated Direct Credits and Automated Direct Debits.  None of the roles as far as one can see, makes the company a revenue collecting agency of the federal government. Even if was so appointed – which seems extremely doubtful  at least from a constitutional point of view– it still has to explain why the funds, which belong exclusively to the distributable pool is floating around at a time most of its beneficiaries are struggling to pay salaries and pensions. Or are we dealing with a supra-agency – an institution above the strictures of state control?

    Could the money be with the apex bank? That again seems doubtful. For much as it can claim to sits atop the financial system, it remains at best an agent to multiple principals – the federal, states and the local councils – the beneficial owners of whatever accrues to the distributable account and all in accordance with guidelines established by the constitution.

    Which again takes us to the earlier question – where is the money?  If only to affirm the sanctity of the saying that the labourer deserves his wages, Nigerians must help Adekoya and his SBH find the money. How much does the Nigerian Governors Forum know? And what have they done about it?

    While we dwell on what that quantum of fund can achieve in a clime like ours, we must also think of the alternative to which the funds could be put –when left in the hand of rogue operatives.  It is the latter prospects that must be seen as truly frightening.

     

    • The column proceeds on vacation.

  • Stamp duty impunity

    Almost three years into the President Muhammadu Buhari administration, Nigeria continues to walk a fiscal tight rope. The punitive wages of economic recession from which the nation has only just fragilely emerged was partly the result of the horrific corruption of the preceding PDP years of the locust, which was compounded by the initial political inertia and policy lethargy of the emergent All Progressives Congress (APC) administration at the centre. Despite the Buhari administration’s substantial stanching of the massive haemorrhaging of public resources through its anti-corruption strategies as well as its herculean efforts to diversify the economy and enhance self-reliance, millions of Nigerians still remain in the stranglehold of mass immiseration.

    As the Federal Government has no choice but to intensify its quest for foreign loans in the face of its largely inherited fiscal crisis, the World Bank this week raised an alarm over the country’s rising external indebtedness along with other African countries. A majority of state governments owe several months of workers’ salaries, allowances and pensions and are unable to meet other obligations to the general public. The virtual paralysis of federal health institutions nationwide as a result of the ongoing strike action by aggrieved health workers over unmet demands illustrates the near state of emergency into which governance has been thrown in Nigeria due to severe financial denudation.

    Against this background, is it not utterly scandalous that about N20 trillion, being revenues from Stamp Duties which ought to have been long paid into the Federation Account for onward disbursement to the federal and state governments, continue to be illegally withheld by the requisite financial institutions and authorities that ought to know better? It is significant that the creative professional and financial engineering ingenuity that led to the generation of this fund is that of Nigerians and not any foreign experts. Specifically, the credit goes to the School of Banking Honours (SBH), an Innovative Enterprise Institution (IEI) and monotechnic registered under Nigerian law to research into banking operations and collaborate with banks and government on banking matters.

    On September 11, last year, this newspaper published an exhaustive investigative story by the Group Business Editor, Simeon Ebulu, detailing how the government and people of Nigeria had for several years been denied the opportunity of benefiting from the humongous funds reaped through stamp duties from the banking public but shrouded in suspicious bureaucratic secrecy. In the report, the SBH’s Managing Director/Chief Executive Officer, Mr. Tola Adekoya, disclosed how, in pursuit of its mandate, the institution’s Job Creation and Research Department discovered that the country was losing gargantuan amounts of revenue, which ought to accrue to the Federation Account, as a result of the non-enforcement of relevant provisions of extant Stamp Duty laws as well as the Federal Government Financial Regulations (2009).

    To plug this loophole and correct the anomaly, the SBH approached the Nigerian Postal Services (NIPOST) on 20th April, 2012, and intimated the latter of an unexploited opportunity in the Stamp Duties Act, 2004, to increase its internally generated revenue by affixing adhesive stamp on banking receipts as provided for in the law. On the basis of this initiative, the SBH entered into a Masters Services Agreement with NIPOST on September 14, 2012, to help facilitate the collection of Stamp Duties on banking receipts in compliance with the Stamp Duty Act, 2004. Armed with the Masters Services Agreement with NIPOST, the SBH approached the Central Bank of Nigeria (CBN) for authorization to engage Deposit Money Banks (DMBs) and other qualified institutions as collecting agents in the stamping and remittance of legally stipulated stamp duties. The CBN gave the required approval on December 3, 2012. And on October 15, 2015, the Nigerian Copyright Commission (NCC) issued the SBH a Copyright Certificate (No. LW1023) affirming its copyright ownership of the initiative on stamp duty collection.

    Before the initiative of the SBH, stamp duty on all Cheques with a value above N500,000 had been paid to the Nigeria Inter-Bank Settlement System (NIBSS) since 1993 with the revenue allegedly not remitted to the Federation Account over the years as required by law. With the intervention of the SBH, however, the scope of the Stamp Duty was vastly expanded to encompass N50 per banking transaction covering manual and e-transfers from N1000 and above. The mandatory stamp duty payment was also extended to cover Local e-transfers, international transfers, internet-banking, ATMs, Point of Sale and e-mobile all covered under the CBN Act, 1991, but inexplicably overlooked until the lapse was pointed out by the SBH.

    Apparently exhausting its patience after waiting for three years with no stamp duty revenue reportedly remitted to the Federation Account and its legal entitlement on the project not met, the SBH issued a Demand Notice to the NIBSS dated 10th March, 2015, entitled ‘Stamp Duty on Electronic Receipts (2013-2014)’ alleging that the sum of N7.719 trillion accruing from stamp duty on electronic cashless transfer between 2013 and 2014 had been illegally kept with the NIBSS rather being transferred to the Federation Account for the benefit of the federal and state governments. According to the SBH, the over N7 trillion in question represents an average of N160 billion realized daily from the specified banking transactions in only five states in 2013 and 2014.

    The institution estimates that when account is taken of the amount that has inevitably accrued on stamp duty over an additional three-year period (2014-2017), the unremitted revenue to the Federation Account stands at about N20 trillion. This implies that the 36 states will be entitled to no less than N200 billion each from the first tranche of the inexplicably withheld revenue.

    In an editorial on the issue published in its 18th September, 2017, edition, this newspaper wrote: “For a country just getting out of the throes of recession and needing every kobo it can get to accelerate the rate of economic recovery and further growth, the SBH’s allegations are too serious to ignore. The appropriate authorities must urgently look into the issue with a view to unearthing the truth and recovering any due amount into the Federation Account if the SBH’s claims are found to be credible”. And true to his anti-corruption credentials, President Buhari reportedly authorized that the issues in contention be investigated and the verified facts made available to him expeditiously.

    It was certainly on this basis that the presidency on 12th October, 2017, approved the retention of the SBH in partnership with Messrs. International Investment Law & Arbitration LLC as the legal Stamp Duties recovery Agent/Consultant with a mandate to “recover over N20 trillion from Nigerian Inter Bank Settlement System (NIBSS) to the Federation Account in line with your patent right now in force”. While the Presidency assured the SBH that “the Federal Government will provide you and your partner (International Investment Law & Arbitration LLC) with adequate security during the assignment”, it however stated that “your consultancy fee is 7.5% of the total amount recovered as against 20% earlier agreed in the Master Services Agreement with the Nigerian Postal Service (NIPOST)”.

    And obviously to underscore its seriousness on the matter, the Presidency followed up with a written directive to the Central Bank Governor on 19th October, 2017, stating the official role of SBH and International Investment Law & Arbitration LLC in the recovery of “the sum of N20.0 trillion Stamp Duty through the Nigeria Inter-Bank Settlement System Plc. (NIBSS)” and stressing that “The Consultants will introduce a sustainable template to meet the CBN directive of 3rd December, 2012, for Messrs. School of Banking Honours to sweep Stamp Duty accruing from banks and other financial institutions into Government coffers, as patented under the Law”. The apex bank was further mandated to “direct the Management of NIBSS, Banks and other Financial Institutions to cooperate with the Consultants to access all records relevant to the success of the assignment”.

    Despite the unequivocal presidential directive, the SBH claims it has met a brick wall in its efforts to commence work on its mandate particularly from the NIBSS. While the SBH met with legal representatives of the CBN on February 1st, 2018, its meeting with the NIBSS scheduled for 5th February, 2018, was reportedly aborted with the latter claiming to be still awaiting a directive from the CBN on the issue. As millions of Nigerians continue to wallow in ever deepening poverty, it is unconscionable to allow N20 trillion that ought to be paid into the Federation Account to ameliorate the plight of the people to continue to lie idle for no apparent just cause.

    If the NIBSS has alternative facts to render the claims of the SBH nugatory, it should make them available for the consideration of the presidency. To continue to stonewall as the NIBSS seems to be doing in the face of the SBH’s legal claims and the clear position of the presidency is an act of intolerable impunity.

  • Fed Govt loses trillions as stamp duty fee is unremitted

    Fed Govt loses trillions as stamp duty fee is unremitted

    Stamp Duty charges on bank transactions may have yielded trillions of naira, but the revenue is unremitted to the Federation Account, The Nation has learnt.

    The fate of the revenue, which is believed to have risen to over N7trillion as at 2015, has pitched the Nigerian Interbank Settlement System (NIBSS) against the School of Banking Honours (SBH), an institution registered by the Nigerian Copyright Commission. The SBH is spearheading the recovery and remittance of the funds into the Federation Account for sharing by the Federal Government and the 36 states.

    SBH’s Project Consultant/Acting Rector Tola Adekoya said based on findings from the research arm of SBH, he raised a Demand Notice dated 10th March, 2015, entitled, “Stamp Duty On Electronic Transfer Receipts (2013-2014)” on NIBSS for N7.719trillion as accruing and unremitted revenue to the Federal Government and the states.

    He was invited by NIBSS for a discussion, but Adekoya is yet to honour the invitation.

    “That invitation is traceable to the Demand Notice of 10th March 2015 that SBH raised on NIBSS as Stamp Duty of N7.7 Trillion due to 36 states and the Federal Government on electronic cash-less transfers which turned over an aggregate N160 Billion daily in just five states of the federation in early 2013, as reported by Central Bank Nigeria (CBN),” Adekoya said.

    He told The Nation that from all indications, that figure may have risen close to N20trillion. He said: ”Further reports revealed that the Stamp Duty revenue has now increased to N20trillion (in local banks), or $53.3 billion (in foreign banks) in four years to 31st March, 2017, and out of which less than one per cent was later swept into a dedicated account with Central Bank of Nigeria, in 2016.”

    To him, the matter of diverted public fund should be of serious concern to the public in view of the amount that is in contention and the involvement of agencies and persons allegedly denying governments of such huge revenue collected from the unsuspecting banking public and for appropriate disciplinary action to be taken.

    By its Memorandum of Association, the SBH is approved to research into banking operations, and collaborate with banks and government on banking matters. It is empowered to represent government in the suit under its Copyright Certificate No. LW1023 dated 27th September 2012, and titled, “50-Naira Stamp Duty for Government on Electronic Cashless Transfers and Manual Bank Teller Deposits”.

    Adekoya said the alleged diversion of public funds should be of serious concern to the public in view of the amounts involved, and the culpability of agencies and persons that have been denying government of such huge revenue collected from unsuspecting banking public, for appropriate disciplinary action.

    He said the SBH had approached the CBN in 2012 to partner on the research outcomes that would absorb retrenched and ex-bankers to lead its young emerging bankers on practical part-time banking jobs at a lower career level that is branded as “Shadow-Banking”.

    “SBH clarified that Shadow-Banking products would birth other Shadow Industries to absorb the youth in high volume, until vacancies exist in their target career sectors, and for which they could be employed,” Adekoya said, adding that the SBH offer was turned down by the CBN, hence the body later aligned its job creation activities with CBN’s Financial System Strategy (FSS) 2020, but the CBN did not complement this, either, he stated.

    Undeterred, Adekoya said, “the Institute then proceeded with a proposal to Nigerian Postal Services (NIPOST) on 20th April 2012 to increase its internal revenue by exploring a narrow window provided for affixing adhesive stamp on banking receipts in Stamp Duties Act 2004, and a Master Services Agreement was signed by both parties on 14th September 2012”.

    “The institute then reverted to CBN on its first research work by a letter dated 27th September 2012, titled, “Revenue Collection for Government through Banks”, requesting for approval to engage banks and other financial institutions as collecting agents on the stamping and remittance of Stamp Duty on manual and electronic transfer receipts from N1,000 ( inclusive of all those from below N500,000 that CBN had earlier set as limit for banks) into government coffers,” the report said.

    The SBH got approval letters from the CBN. Its two defined roles were firstly to affix N50 stamp as evidence of Stamp Duty Paid on bank receipts, as covered by the Master Services Agreement with NIPOST, and secondly to sweep Stamp Duty Revenue to government, as duly covered by the Copyright Certificate No. LW1023.

    Based on the CBN approvals, the institute secured written commitments from three banks to lead other banks on manual stamp duty collection for government.

    Adekoya said  since “NIBSS needed no such circular on electronic stamp duty collection for the government, because it runs a central operation, it joined the institute at a press conference on 4th January 2013 to support the government’s revenue project, and was engaged as the ‘official sweeping agent’ for government on 7th January 2013.”

    He said the government directed that the only thing we should not charge stamp duty on is naira currency. “We went to Nigeria Interbank Settlement System (NIBSS), which is the firm maintaining the portal for cash-less policy for all the banks. By January 2013, we were ready to run it. Since 1993, NIBSS has not remitted any stamp duty to the government,” Adekoya, said.

  • N4tr lost in 10 years to non-payment of stamp duty

    N4tr lost in 10 years to non-payment of stamp duty

    A lecturer with the National Open University (NOUN) Bauchi Study Centre, Prof Ahmed S Gidado yesterday said Nigeria last lost over N4 trillion to non-payment of Stamp Duty by different organisations.

    He spoke at the commemoration of this year’s World Post Day at NIPOST Office in Bauchi, Bauch State.

    Gidado, who chaired the occasion, noted that the non compliance to stamp duty by government and private agencies  over the years has contributed to loss of huge revenue that would have accrued to the Federal Government.

    The professor said: “In the banking sector, government lost over N2 trillion to the same non payment of the Stamp Duty in the last four  years, and in the aviation sector, about N5 billion has been lost, or unaccounted for in the last four years.

    “The transportation sector and ports authority are also among the worst culprits in the stamp duty compliance default. It is estimated that  N2 trillion have been lost in the past three years. All these are structured areas that government can  track and direct stamp duty revenue to the government treasury.”

    He charged the Federal Government to reposition and restructure NIPOST so as to raise the revenue base and create jobs through effective Stamp Duty Act implementation.

    NIPOST’s Regional Manager, Zoaka Habu Mohammed, noted that NIPOST has been  operating in a very competitive business environment aided by globalisation and characterised by market liberalisation.

    He said that the emerging new technologies demand constant innovation to catch up  with moderndevelopment.

    Mohammed said: “Yet the post exists and has been able to make its mark in the sand of time. From sending and receiving of letters and parcels to transactions in financial instruments, the post has been able to touch the lives of all categories of people all over the world by taking advantage of new technologies and introducing ICT into all aspects of our services”

  • Is N50 stamp duty legal?

    Emokiniovo Dafe-Akpedeye, who holds a First Class degree in Economics and Management and a Law Degree from the University of Oxford, and Joseph Onele, also a First Class holder in Law from the University of Ibadan (UI), ask if the N50 stamp duty is legal.

    • Continued from last week

    Additionally, assuming arguendo that indeed the CBN Circular was made pursuant to the Regulations, one wonders why the CBN Circular has only two exceptions whereas the Regulations in Regulation 620(b) enumerates the situations when payment of stamp duties will be exempted and they include the following: payment of goods supplied or services rendered if the amount is under N1,000; advances of salary; salaries, duty pay, seniority pay; duty tour, travelling and transport allowances; wages; refund of out-of-pocket expenses incurred and paid by officers in the course of their duties; pensions, gratuities, compassionate allowances; repayments of prisoners’ property and sums deposited in the Treasury under the provisions of the Mineral Act; refunds of overpayments to Government; customs drawbacks; custom duties refunded upon certificate of over-entry or upon re-importation certificates; receipts given by officers on behalf of Government in their official capacity; imprest; advances (other than advances of salary) where the officer receives no personal benefit therefrom; receipts given by accused person for money taken from him on arrest; and duplicate receipt required for payment of several amounts.

    Curiously, one wonders why the CBN has chosen to mislead the entire populace into believing that one is liable to pay N50 stamp duty on deposits above N1000, as opposed to one being liable to pay N50 stamp duty for receipts issued for payment for banking service(s) rendered by the bank, where the value of the service(s) rendered is above N1,000.

    In any case, the writers opine that the entire purport of the Regulations in relation to amending the express provision of the SDA is unequivocally null and void because as a subsidiary legislation, it is not made pursuant to the SDA, neither is it endowed with such powers by a primary legislation.

    Revisiting the Federal High Court Decision and the scope of CBN Powers

    Having tested the 2016 Circular against the waters of the SDA and the Regulations and submitted that it could not be rightly argued that the CBN acted within the ambit of either statutory instrument, it become pertinent to consider the propriety of the decision of the Federal High Court (FHC), delivered on 17 April 2014 in Suit No FHC/L/CS/ 1710/2013 – Kasmal International Services Limited v Central Bank of Nigeria (Kasmal Case).

    In Kasmal Case, the gist of the case before FHC was whether the CBN was not duty bound to ensure that all financial institutions, under its regulation, comply with all provisions of the law including the provision of SDA, NIPOST and the Financial Regulations 2009 (Regulations).

    Curiously, the judge in summarising the bone of contention between the parties noted that “The defendant is … being called upon to ensure compliance by the Banks with the remittance of the claimed stamp duty sums, i.e. N50 stamp duty for every transaction in the sum of N1000 and above to NIPOST in accordance with the enabling provisions.” Notably, the Court held inter alia: “[i]t is therefore not in doubt that electronic transfer and tellers amounting to or above the prescribed amount are writings by which deposits are made into bank accounts” and they are receipts within the meaning and intendment of Section 89(1) of the SDA.”

    As a preliminary point, it is apt to mention that the argument put forward by the Plaintiff’s Counsel that the Regulations have increased the minimum sum from N4 to N1000 and have established the value of adhesive (postage) stamp to be used as N50 is grossly misconceived in law. As previously mentioned, only the National Assembly is empowered under Section 116(1) of the SDA,to “increase, diminish or repeal the duty chargeable under any of the heads specified in the Schedule” by passing a resolution. Curiously, one wonders why the CBN who had argued that in the absence of any statutory provision empowering NIPOST to engage a private firm in the collection of stamp duty, the whole transaction is null and void would have failed to draw the attention of the Court to the fact that the “receipt” contemplated under the SDA is only in respect of goods supplied and services rendered and no more.

    Again, it is also quite disturbing that the learned trial Judge failed to answer the fundamental question of the legality the N50 fee being charged as stamp duty which, as earlier discussed, cannot be justified in law and should ordinary have been declared illegal. The authors are equally perturbed that the learned trial Judge failed to give due consideration to the relevant provisions for the SDA, for if this has been done, the honourable trial Judge would have made a finding that the draftsman, as at the time the SDA was enacted did not envisage electronic transfers.

    We shall now proceed to discuss the relevant sections relied upon in Kasmal Case which include sections 33(1)(b), 42(1)(c) of the CBN Act and sections 61(1)(a) of BOFIA. First, we are not unaware that by a community reading ofsections 33(1)(b) and section 42(1)(c) of the CBN Act which provides that: (x) issue guidelines to any person and any institution under its supervision and; (y) seek the cooperation of other banks in Nigeria, to further such policies not inconsistent with the CBN Act and as may in the opinion of the CBN be in the national interest respectively, the CBN is empowered to ensure that all financial institutions comply with every single law of the Federation.Of course, we are equally not blind to the fact that the CBN is entrusted with the duty to promote a sound financial system in Nigeria. The foregoing notwithstanding, we are of the considered view that the power of the CBN, including the power to do any act incidental to the exercise of its power under the CBN Act and even under BOFIA cannot, by any stretch of imagination include the power to enact a subsidiary legislation regulating the regime of stamp duties in Nigeria.  Consequently, it is respectfully submitted that the above stated provisions must be understood in the context of the specific laws.

    As a corollary, if a bank evaded taxes, it is the Federal Inland Revenue Services that would serve default papers and institute actions against the bankpursuant to its powers and duties under the Companies Income Tax Act. Conversely, if a financial institution was cooking its books, the CBN, under its powers in section 61(3) of BOFIA, could order a special examination of its books in the public interest. There is therefore a limit to the supervisory role of the CBN based on the object of the CBN Act and BOFIA.

    In the same vein,section 57 of BOFIA, which gives the CBN power to make regulations,restricts this power to regulations that will give “full effect to the objects and objectives of this Act”. Thus, a perusal of the BOFIA will show that it covers subjects pertaining to the issuing of licences, control of failing banks, ensuring banks maintain a minimum share capital and capital ratio, and controlling the reorganisation of banks among others. These are the objects of the BOFIA and therefore, the CBN’s supervisory role is limited to what is explicitly stated in the Act .

    By the same logic, section 6 of the SDA provides for Commissioners of stamp duties who “shall have the care and management of the duties to be taken under the Act”. Therefore, it can be rightly submitted that any perceived/purported illegality of the banks in non-compliance with the provisions of the SDAis to be considered and dealt with by the”relevant Civil Service Commission”. It is our humble position that it is not for the CBN to regulate any law enacted which may or may not have an impact on financial institutions unless a statute specifically makes the CBN the regulatory authority.

    The authors respectfully opine that neither Counsel nor his Lordship took cognisance of the limitations of the statutory provisions under the CBN Act and BOFIA. As a statutory body, the law is clear that the CBN is only permitted to act within the scope authorised by statute. In fact, copious time was spent in the case analysing whether or not the “supposed” revenue generated from the N50 charge is revenue due to the Federal Government or NIPOST and also whether NIPOST was allowed to sub-contract the collection of the fee pursuant to the NIPOST Act. It is rather disappointing that the legality of the fee, which is the foundation of any Circular, was not discussed in more detail. It is our hope that through this discourse and careful evaluation of the law, the arguments at the Court of Appeal can be refined to focus firmly on the legal underpinning for any charge on banking customers.

     

    Conclusion

     

    One might ask why so much mental effort has gone into producing an article focusing on the illegality of a mere N50 charge. But in a time all Nigerians are tightening the belt on expenditure, every naira counts!N50 will run in thousands and millions yearly. Therefore, until there is an adequate legal basis for such a fee, it should be discarded as maintaining such would amount to affront to our legal jurisprudence. Essentially, this article shows the folly in the CBN’s Circular, in that there is hardly any legal justification based a read of the SDA, Financial Regulations Act, CBN Act and BOFIA.

    In sum, the critical points to take away from this article are that: (x) the relevant sections of the SDA are evident on the fact that it was never within the contemplation of the Act that electronic transfers would be liable to stamp duty; (y) there is no “receipt” in the type contemplated by the SDA in an electronic transfer to warrant the imposition of a duty; (z) the Financial Regulations is inconsistent with the requirements of the SDA and therefore is null and void; and (xx) the CBN acted beyond its powers in making the 2009 and 2016 Circulars.

     

    • The authors can be reached on: e.dafeakpedeye@hotmail.com; ojoseph990@gmail.com

  • Is N50 stamp duty legal?

    Emokiniovo Dafe-Akpedeye, who holds a First Class degree in Economics and Management and a Law Degree from the University of Oxford, and Joseph Onele, also a First Class holder in Law from University of Ibadan (UI), ask if the N50 stamp duty is legal.

    • Continued from last week

    Therefore, it is clear that in this regard, it is the National Assembly that has the power to vary such amounts. As will be discussed later in detail, the Financial Regulations 2009 (the Regulations) was not made via a resolution of the National Assembly. Thus, any declaration by the Regulations stating that a payment of N50 for every N1000 is void ab initio due to its blatant inconsistency with the statutory provision. If at all the stamp duties apply to electronic transfer, then as stated in the Schedule to the Act, for any receipt of N4 or upwards, a duty of 20 kobo is payable. No doubt this proposition poses a problem for collection of the duty since Nigerian Postal Service (NIPOST) no longer sells stamps of 20 kobo. However, just because there is an administrative hurdle does not mean that the clear provisions of the law can be overridden without following the proper procedure laid down by the law, which in this case is the SDA.

    In addition to the foregoing, by Section 115(f) SDA, the President and the Governor of a State are empowered to make regulations in furtherance of the actualisation of the objects and purposes of the SDA. Upon a careful read of the SDA, it is crystal clear that there is no provision in the SDA, which empowers the CBN to either vary the extant provision of the SDA or to expand same, when it so desires. One needs no soothsayer to come to the realisation that the CBN has indeed amassed for itself, powers it was never conferred with. Of course, it is quite elementary that the CBN has neither the power nor authority to act outside the Statute. See Olaniyan v. University of Lagos [1985] NWLR (Pt.9)599.

    In any case, the authors believe that the charging of N50 for every N1000 on electronic transfers is ultra vires and has no legal backing based on the interpretation of the enabling Act, which in the case would be the SDA.

    Having tested the 2016 Circular against the extant provisions of the SDA and making a finding that the 2016 Circular, cannot by any stretch of imagination, be said to have been validly made pursuant to the SDA, it becomes imperative to test the Circular against the waters of the Federal Government Financial Regulations (which was greatly relied on in the 2016 Circular).

    Federal Government Financial Regulations 2009

    Whilst it is not in doubt that the Federal Government Financial Regulations 2009 (the Regulations) seek to regulate all government financial transactions, including the receipt, custody of and accounting for government revenue, the procurement, custody and utilization of government stores and assets, and the disbursement of funds from the major government funds,  a cursory look at the preface to the Regulations will revealthat the Regulations are borne out of the concern of the government to ensure that requisite rules and regulations that would guarantee probity and transparency in the control and management of public funds and resources of government are put in place.

    Further to the foregoing, it is quite instructive to note that Regulation 105 specifically provides that the financial regulations will apply to the Federal Public Service, which in the context of the Regulations means ministries, extra-ministerial offices and other arms of government. As earlier mentioned, the statutory rule of interpretation namely, expressiounius exclusioalterius applies under the Nigerian jurisprudence. See Nawa v. Att., Gen. Cross Rivers State (2008) ALL FWLR (Pt. 401) 807 at 843, paras. F – H (CA).

    Again, while it may appear quite elementary that the Regulations are a means by which the Government’s Finance and Accounting procedures are regulated, with a view to promoting honesty and transparency, an anomaly exists as to the statute empowering the enactment of the Regulations, a subsidiary legislation. It is a settled principle of law that a subsidiary legislation must be made pursuant to an enabling primary legislation. On this score, it is quite instructive to note the decision of the Court of Appeal in Njoku & Ors. V. Iheanatu & Ors. (2008) LPELR-3871(CA) where it espoused on what a subsidiary legislation is and held as follows:  “A subsidiary legislation…is one that was subsequently made or enacted under and pursuant to the power conferred by the principal legislation…It derives its force and efficacy from the principal legislation to which it is therefore secondary and complimentary.”In contrast, Regulation 105, which empowers the Minister of Finance, to issue from time to time financial regulations merely states that this must be in accordance with existing laws and policies of government. One would have expectedthat the power to make the Regulations would have been traceable to an enabling Act and ultimately, the Constitution of the Federal Republic of Nigeria (the Constitution).

    Of course, the authors are not unaware that the Minister of Finance can lay claim to Section 4(1) of the Finance (Control and Management) Act (the Finance Act) which mandates every person concerned in or responsible for the collection, receipt, custody, issue or payment of public moneys, stores, stamps, investments, securities, or negotiable instruments, whether the property of Government or on deposit with or entrusted to Government or any public officer in his official capacity either alone or jointly with any public officer or any other person, to obey all instructions that may, from time to time, be issued by the Minister or by direction of the Minister in respect to the custody and handling of the same and accounting therefore. It is equally noted that the Finance Act is an Act to provide for the control and management of the public finances of the Federation and for matters connected therewith. Further to the foregoing, one might thusargue that the Regulations were made pursuant to the powers vested in the Minister under the Finance Act.

    Based on the above and as will be shown shortly, it cannot be correct to argue that the CBN has the power to not only expand the provisions of the SDA but to also assert that the Regulations apply to all manners of persons, notwithstanding the nakedness of legal support in this regard. It goes without saying that a body, which is a creation of a statute, cannot do anything at all, unless authorised expressly or impliedly by the Statute or instrument defining its powers.

    However, assuming arguendo that the Regulations indeed apply to all manner of persons and that the CBN can “expand” the provisions of the SDA without recourse to legislative intervention, it is respectfully submitted that the Regulations cannot by any stretch of imagination, provide legal comfort for the 2016 Circular. For instance, Regulation 620 provides inter alia that “Receipts given on payment vouchers are liable to Stamp Duty in accordance with the Stamp Duties Act.” In other words, the only person obligated to pay Stamp Duty in accordance with this provision is the issuer of a receipt given on payment vouchers as required under section 89(2) of the SDA.

    Upon a careful read of the foregoing provision, it is unassailable that the liability to pay N50 stamp duty will only arise where a receipt is given for either payment for goods supplied or for services rendered is above N1,000. Driving the point home, where noreceipt is given, taking for instance, an online transfer to another, it cannot be right to argue that such payment must attract theN50 stamp duty.

    In addition, a situation, like the instant one, where banks and other financial institutions were instructed to charge N50 stamp duty for every deposit (save to one’s account) does not accord with the spirit and intendment of the Regulations as will be shown shortly.

    Assuming without conceding that the applicability of the Regulations is not limited to only members of the Federal Public Service but to all persons, it is the writers’ position that mere deposit of money to someone else’s bank account(s), without more, does not trigger the obligation to pay N50 stamp duty. Rather, what triggers the obligation is the issuance of receipt, if any, by the bank for the banking service(s) rendered and receipts issued for payment of goods. The above submission finds support in the ageless principle of law that where the language of a statute is clear and explicit, they ought to be given their plain and simple meaning as the said words speak for themselves, particularly as they clearly demonstrate the intention of the drafters.

    • To be continued next week