New Legal Regime on Stamp Duty Charges

Stamp duty is a tax that is levied on single property purchases or documents (including, historically, the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions).

The Finance Act, 2019 amended some provisions of the Companies Income Tax Act, Petroleum Profit Tax Act, Personal Income Tax Act, Value Added Tax Act, Customs and Excise Tariff etc., Capital Gains Tax Act and Stamp Duty Act.

Sections 52 to 56 of the Finance Act, 2019 amended Sections 2, 4, 89 and the Schedule of the Stamp Duty Act, 2004. Section 55 of the Finance Act, 2019 deleted Section 90 of the Stamp Duty Act, 2004.

We shall discuss new trends in stamp duty charges under the Finance Act, 2019.

Modern innovations on stamp duty under the Finance Act, 2019

Section 52 of the Finance Act, 2019 amended Section 2 of the Stamp Duty Act, 2004 to extend the meaning of “stamp” to include “an electronic stamp or electronic acknowledgment” for denoting any duty or fee. Again, the provision extended the meaning of “stamped” to include “instruments and materially tagged with electronic stamp or national stamp on an electronic receipt”. The meaning of “instruments” is extended to “electronic documents”.

Similarly, Section 54 of the Finance Act, 2019 amended Section 89 of the Stamp Duty Act, 2004 to include “electronic inscription whereby any money” is paid within the meaning of “receipt” for the purpose of stamp duty payment. Section 89 is introduced to provide for “digital tag with electronic stamp or any acknowledgement of duty charged on an electronic transaction”.

Section 89 is also introduced to provide that “electronic receipt or electronic transfer for money deposited in any bank” of N10, 000 naira and above paid by the owner of the account shall be charged a one-off duty of N 50 naira.

Who is the competent charging authority?

Under Section 53 of the Finance Act, 2019 which amended Section 4 of the Stamp Duty Act, 2004, the Federal Inland Revenue Service is the competent authority to charge duties on instruments between a company and an individual, group or body of individuals.

The relevant tax authority in a State is the competent authority to charge duties on instruments between persons or individuals within the respective States of the Federation.

The FIRS is empowered to collect stamp duties on all banking transactions though its agents; Banks and other Financial Institutions.

How much is the duty on electronic receipt or electronic transfer?

By the provisions of Section 54 of the Finance Act, 2019, a one-off duty of N 50.00 shall accrue for amounts from N 10, 000 and above. Nevertheless, duty shall not accrue where a person pays or transfers money electronically between his accounts within the same Bank.

What are chargeable transactions?

Instruments such as agreements, contracts, receipts, memorandum of understanding, promissory notes, insurances policies and other transactions listed in the Schedule to the Stamp Duty Act, 2004 are subject to stamp duty.

Exempted transactions under the Finance Act, 2019

a) of the Finance Act, 2019 amended the Schedule of the Stamp Duty Act, 2004 to include exempt receipts as “receipts given by any person in a Regulated Securities Lending Transaction carried out under regulation issued by the Securities and Exchange Commission”.

b) of the Finance Act, 2019 amended the Schedule of the Stamp Duty Act, 2004 and provided that shares, stocks or securities returned or transferred by a lender to its approved agent or a borrower in furtherance of a Regulated Securities Lending Transaction as well as documents relating to regulated securities lending transactions carried out under regulations by the Securities and Exchange Commission are exempted from stamp duty.