The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has reportedly perfected plans to embark on a nationwide probe of banks over the non-remittance of stamp duties which is now in the tune of N100 billion.
According to a statement that was issued yesterday in Abuja by RMAFC spokesperson, Mr Ibrahim Mohammed, the probe would involve a forensic investigation of the funds that had so far been collected as stamp duty by 22 Deposit Money Banks (DMB) from 2000 to 2018.
About Stamp duties
Stamp duties are statutory taxes levied on legal documents such as cheques, receipts, military commissions, licences and land transaction papers.
Few year back, banks operating in Nigeria were mandated to collect stamp duties from every account holder. While the deductible amount per bank account is small, it all adds up to billions and sometimes even trillions of naira.
Stamp duties are, therefore, part of the public revenue collectables and must be subject to the full conditions of disclosure.
RMAFC has generated over N33 billion
RMAFC is the only constitutional body vested with the powers to monitor all revenue accruals into the Federation Account.
According to the commission spokesperson, the commercial banks had been deducting the sum of N50 on every deposit with a value of N1,000 and above since January 2000.
Meanwhile, Mr Mohammed reportedly disclosed that the commission had realised a total sum of N33 billion through the collection of stamp duties which falls far below the expectation of stakeholders.
Earlier reports show N20 trillion unremitted Stamp Duty
At the end of 2018, concerns mounted over the non-remittance to the Federation Account of about N20 trillion generated from stamp duties in recent years.
The sum of N7.79 trillion was reportedly generated in 2015, with the total outstanding in the region of N20 trillion by the end of 2018.
According to detailed investigations by the International Centre for Investigative Reporting (ICIR) in 2018, complicit in this irregularity are key public institutions such as the Central Bank of Nigeria [CBN], Office of the Secretary to the Government of the Federation, Federal Inland Revenue Service [FIRS], Nigerian Interbank Settlement System [NIBSS] and Nigeria Postal Services, NIPOST.
Forensic Auditors: RMAFC plans N100bn revenue recovery plan from banks
Furthermore, Mohammed indicated that the commission had concluded plans to engage the services of reputable forensic audit firms to carry out the probe aimed at recovering over N100 billion.
“It is expected that at the end of the exercise, over N100 billion would be recovered.”
Call to the Senate and FG, as RMAFC targets N500bn
In 2017, the Nigeria Senate mandated its committees on finance and banking, insurance, and other financial institutions to investigate alleged N7 trillion non-remittance of stamp duty revenue in the last five years.
The upper chamber reportedly stated it discovered that the Nigerian Inter-Bank Settlement System (NIBSS) was being accused of systemic diversion of huge revenue from stamp duty. Mohammed had, once again, called on the Nigerian Senate, saying the following”
“The commission is using this medium to appeal 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 to the federation.”
According to Mohammed, if the Nigerian Postal Service (NIPOST), was properly repositioned through the appropriate legal and regulatory framework, and the introduction of appropriate technology, the agency could generate over N500 billion.
This is a step in the right direction, to budget deficit financing
Nairametrics tried to consider the implication of this for the economy. Considering the breakdown of tax collected by the Federal Inland Revenue Service (FIRS), stamp duty constitutes one of the four components of the Non-oil Tax revenue.
However, out of the target of N11.15bn target for Q4 2018, the tax agency only generated N5.3bn, that is approximately 48% of the total target. This shows half of the revenue target from stamp collection is not met. Also, from the total tax collected in Q4, Stamp Duty recorded only a meager 0.37%.
Following DMO’s recent disclosure that the 2019 budget deficit will be funded by 88.7% borrowed fund, Nairametrics opined that tightening loose ends to improve Stamp Duty revenue will reduce the future budget deficit financing in Nigeria.