The Federal Inland Revenue Service (FIRS) has issued a Public Notice on stamp duties in the Stamp Duties Act as amended by the Finance Act 2019 (SDA). Stamp Duty is a charge either a fixed rate or ad valorem rate, depending on the type of instrument.
Types of flat rate instruments are;
- Appointment of receiver
- Certificate of occupancy
- Guarantor’s form
- Joint venture agreement
- Memorandum of understanding
- Ordinary agreements
- Power of attorney
- Proxy forms
The flat rate for electronic receipt and transfer of money deposit is:
- A single fee of
N50 for any electronic receipt or electronic transfer of money deposit from N10,000 and above. N50 per receipt will apply to transactions between corporate bodies or between a company and an individual, a group of individuals where the amount is N10,000 and above. The receipt can be written, printed, or in an electronic form.
Types of Ad-valorem instruments are;
- Contract notes
- Contract agreements
- Deed of assignment
- Insurance policies
- Legal mortgage
- Promissory notes
- Tenancy or lease agreements
- Sales agreement
- Vending agreements
Stamp duty on tenancy agreement
Stamp duty on a tenancy agreement is not a new law. Rather, it is an old provision which the tax authority (Federal Inland Revenue Service or FIRS) wants to enforce going forward. The rate varies depending on the tenor of agreement:
Below 7 years = 0.78%
From 7 years to 21 years = 3.00%
Above 21 years = 6%
FIRS has powers to collect stamp duties on specific instruments between a company and an individual or group of individuals. However, the state tax authority can collect SD on transactions between individuals.
Controversy on the exclusive right to stamp duties in Nigeria
Recently, the Nigerian Postal Service (NIPOST) pronounced that its rights to print, mint, produce, sell and provide postage adhesive stamp. The position of NIPOST contradicts FIRS Information Circular on Stamp Duties as being the competent authority for the collection of Stamp Duties. While NIPOST provides a postage adhesive stamp, FIRS has also introduced the use of the FIRS adhesive stamp. The House of Representatives in Nigeria has also intervened to resolve the SD dispute. Both agencies may, therefore, seek to reach a consensus on the powers and exclusive rights for better clarity to the public.