The House of Representatives has passed a new Stamp Duty Bill, which seeks to amend and repeal the 2004 Stamp Duty Act.With the passage of the bill, the lawmakers have endorsed the controversial deduction of N50 from deposits into accounts with Deposit Money Banks (DMBs) across the country using electronic platforms.
Contents of the bill
The new bill raised the bar for the collection of stamp duty on bank deposits from N1,000 to N3,000. Accounts pertaining to education of children are however exempted from stamp duties. In addition, the Bill also seeks to legitimise the recent inclusion of savings accounts as eligible for imposition of stamp duty as the Central Bank of Nigeria (CBN) had in its memo on the matter excluded savings accounts for stamp duty collection.
What are stamp duties ?
Stamp Duties includes all receipts given by any bank or financial institutions in acknowledged of services rendered in respect of electronic transfer and teller deposits from N1000 and above. Charges also include court processes, statements at police stations, land title documents, agreements among others.
The Stamp Duties Act, Chapter S8, Laws of the Federation of Nigeria (LFN) 2004 (SDA) provides the legal basis for the imposition and collection of stamp duties in Nigeria.
Enforcement has been controversial
Although the 2004 Stamp Duty Act approved the fixing of N50 stamp on documents witnessing transactions worth N1,000 and above, the law became controversial when banks were directed to deduct N50 on deposits in banks of N1,000 and above.
Based on the 2004 Act and a circular issued by the Central Bank of Nigeria in January 2016, banks operating in the country have been deducting N50 from deposits in bank accounts across the country.
In a ruling on an appeal filed by Standard Chartered Bank against Kasmal International Services Limited and 22 others, Justice Ibrahim Saulawa and four other justices of the Court of Appeal, Lagos Judicial Division, held that the Stamp Duty Act, 2004 did not impose a duty on the DMBs to deduct N50 on bank deposits. According to the court, electronic transactions are not covered by the Stamp Duty Act.