Commercial Banks in Nigeria still charge the N50 stamp duty despite a court ruling that confirms it is illegal. Earlier in the year, the Federal Government had relied on provisions in the Stamp Duty Act of 2004 to charge customers a flat N50 on deposits made into their bank accounts.
However, a court ruling last month rendered the tax illegal confirming that the act does not include electronic deposit of cash into bank accounts. In a ruling delivered earlier in November Iby an Appeal Court panel of Justices Ejembi Eko, Adamu Jauro, Moore Adumein and Nonyerem Okoronkwo, they agreed on an appeal filed by Standard Chartered Bank against Kasmal International Services Limited and 22 others that the duties were illegal.
“However, I would want to agree with the submission of the appellant that in the absence of any express provision to the contrary, (by way of amendment of the Stamp Duties Act) the provisions of the schedule of the Stamp Duties Act, especially item four clearly show that the documents, which evidence receipt of monetary deposits by a bank, such as the appellant, are exempted from the payment of stamp duties.
“As such, there is no obligation thereupon to deduct and remit stamp duties on deposits or transfers, either as erroneously found by the court below, or at all. And I so hold.”
Despite this ruling, some banks are still charging stamp duty. Here is a screenshot of an alert from a bank account recently debited for Stamp Duty.
Why are they still charging?
Indications suggest it could be either of two reasons. Firstly, is the slow attitude towards implementing court ruling especially when it has to do with tax. Banks are apparently afraid to fall under the wrath of the FG and will rather not err on their side but on the side of their customers. We also believe, they are yet to obtain a directive from the government or CBN instructing them to stop deducting.
Another reason could be that the government is about to amend the act to allow it accommodate electronic transactions. This could take month’s if not years and is likely to face massive revolt from citizens tired of being “over taxed” with little or nothing to show for it.