Why You Are To Blame For N50 Stamp Duty Charge…

Following the crash in crude oil prices and its low production level in 2016, the Federal Government was at a loss on how to generate the necessary revenue to run the country’s economy. The solution the monetary authorities proffered was to increase taxes and levies placed on goods and services as well as on companies’ earnings. That was the beginning of all sorts of taxes- GSM Tax, DSTV Tax, Stamp Duty collection, etc. While some of these taxes never saw the light of the day, others did.

The Stamp Duty collection was one of those that eventually became a reality. However, since its inception, it has been a contentious issue that has visited the court on several occasions. However, as will be shown by a review of the cases on it, stamp duty collection is not backed by the courts or the laws of the Federal Republic of Nigeria.

The issue was actually initiated as far back as 2013, when Kasmal International Services Ltd sued the CBN and deposit money banks, and the Federal High Court ruled that stamp duty of N50 was payable on every deposit or fund transfer of N1000 and above; and the CBN and Deposit Money Banks were obliged to implement the deduction.

During the same year, Standard Chartered Bank Nigeria appealed the earlier decision at the Court of Appeal. After several hearings, the Appeal Court upheld the appeal of Standard Chartered Bank and set aside the decision of the Federal High Court in granting permission to collect stamp duties.

However, fast forward to the tumultuous 2016, and despite the ruling of the Court of Appeal, the CBN surprisingly issued a circular dated January 15, 2016 to all Deposit Money Banks to the effect that stamp duty of N50 for every payment of N1000 and above would be applicable to all receiving accounts in the country with immediate effect.

As a result, the CBN and Citibank were dragged to the Federal High Court by Retail Supermarkets Nigeria Limited, owners and operators of Shoprite retail outlets across the country on 8th July 2016 over the deduction of stamp duties on its business transactions. The High Court, this time, upheld the decision of the Appeal Court, stating that the Appeal Court’s decision supersedes that of the High Court delivered in 2013. As such, the CBN’s circular GEN/CBN/DMB/02/006 was set aside.

However, because the case was not a class action, several banks continue to charge this fee, despite the Appeal Court’s ruling on the contrary. Thus, until there is sufficient public interest to challenge the circular through a class action, Nigerians will continue to suffer the illegality of the stamp duty collection.

Credits: Chacha Wabara