What you need to know.

Stamp Duty Administration  in Nigeria

Stamp duty is a tax on instruments (mostly written documents) which can either be a physical or an electronic document.

It is based on the Stamp Duties Act (SDA), CAP S8 LFN 2004 as amended. The relevant tax authority for stamp duty is the Federal Government who is responsible for imposing and collecting stamp duties charged on all instruments except those executed between individuals which is due to the relevant state government.

“Stamp Duty is chargeable on both physical and electronic instruments in two ways i.e. Ad-valorem, where duty payable is a percentage of the consideration on an instrument; or Flat Rate, where a fixed sum is chargeable irrespective of the consideration on dutiable instrument or document.”

The FIRS is empowered to collect stamp duty for the Federal Government while the state Internal revenue service are responsible for collecting for the state government.

It is the responsibility of Ministries, Departments and Agencies (MDAs), Money Deposit Banks (MDBs), Companies, Landlords, Executors, and others to ensure that service providers, contractors and tenants pay stamp duties due on agreements, receipts and other dutiable instruments

The proper time to stamp an instrument is on or before the execution of the instrument. Such stamp can however be cancelled by the person by whom the instrument is first executed and, at the time of such execution.

Note that an unstamped instrument may not be admissible in court under law.

S.5(1) of the SDA states that “All duties on any instruments shall be paid and denoted or to be denoted by impressed stamps only, where express provision is made to the contrary in this Act or by regulations

The duty may be denoted by adhesive stamps or impressed stamps. Postage stamps from NIPOST can be used in place of adhesive stamps but adhesive stamp does not mean postage stamp.

The primary purpose of a postage stamp when affixed to an envelope, postcard, or a package is to serve as evidence that postal charges have been paid.

There are penalties for non-payment of stamp duties under the Stamp Duty Act 2014. Payment of amount due and 10% penalty plus interest at CBN MPR and or up to 3-year imprisonment.

Examples of dutiable instruments include;

• Registration of a company
• Tenancy agreement
• Bank transfer above N10,000
• Execution of insurance policies
• Contract of agreements
• Bill of exchange
• Letters of credit
• Valuation or appraisal of property
• Memorandum of understanding
• Loan agreement
• Certificate of Occupancy
• Payment receipts
• Warrant of interest
• Bill of lading
• Insurance policies

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