Emmanuel kehinde,Ilorin
A tax consultant to several State Governments on stamp duties, Chief Francis Uzoma Ubani, has said that State governments have rights to co0llect stamp duties and ensure the assessment, collection and accounting for stamp duties between persons or individuals into the State Governments’ Revenue Accounts.
He added that such responsibilities include transactions carried out by persons or individuals, and Deposit Money Banks and other Financial Institutions have a duty to comply fully with the relevant provisions of the law.
According to him, any directive to the contrary is unconstitutional and wrong and should be voided.
He stated these in his letter to the Executive Chairman, Federal Inland Revenue Services, Dr Zacch Adedeji, which was made available to journalists on Thursday.
Ubani said: “It is therefore, not right as directed in paragraphs 5 (iii) and (iv) of the FIRS Press Release on Clarification on Administration of Stamp Duties in Nigeria, which states that the FIRS is vested with powers to collect stamp duties on all banking transactions, as the powers given to the State Governments through their respective Revenue Authorities to administer stamp duties by ensuring the assessment, collection and accounting for stamp duties between individuals into the State Governments Revenue Accounts does not include banking transactions, Deposit Money Banks and other Financial Institutions relied on, in not remitting qualified chargeable stamp duties to the federating State Governments, pursuant to Section 4 (2) of the Stamp Duties Act, as amended, is a very wrong clarification that is not supported by the applicable laws on the issue, based on the facts stated herein. Also, the proviso to paragraph 7 of the said FIRS Press Release on Remittances of Stamp Duties, states thus:
“Please note that stamp duties chargeable on all electronic transfers of money (including those initiated by an individual and received by another individual) through any Money Deposit Bank in Nigeria, shall be remitted into the FIRS Stamp Duty Account only. This account is a Federation Account; the revenue accruing therein is distributed monthly to the three tiers of government in Nigeria (i.e. Federal, State and Local Governments) at the Federation Account Allocation Committee (FAAC) meeting”.
“It is obvious that the FIRS is aware that transactions initiated by an individual and received by another individual, pursuant to Section 4 (2) of the Stamp Duties Act, belongs to the different States’ Relevant Tax Authorities, but decided to usurp the States’ collecting powers, in gross violation of the “Division of Taxing Powers” enshrined in the 1999 Constitution. It is therefore, our contention that stamp duties collected by the Government of the Federation, through FIRS, under Section 4 (1) should not be paid into the Federation Account as directed by the FIRS, in paragraph 7 of the Press Release on collection and remittances of stamp duties dated 20/7/2020, and the CBN’s circulars, as continuing doing so would be inconsistent with the provisions of Section 163 of the Constitution of the Federal Republic of Nigeria, 1999, as altered.
“We therefore, urge you, Executive Chairman, to use your good offices and withdraw the obnoxious FIRS Press Release on Clarification on Administration of Stamp Duties in Nigeria dated 20/7/2020 and replace it with a version that is consistent with the provisions of the 1999 Constitution.
Ubani, a Research Fellow, Research Institute for African Development, pointed out that in the Finance Acts, 2019 and 2020, the definition of stamp, instrument and receipt was enhanced to include electronic transactions and receipts and specifically imposed a charge of N50.00 on electronic transfer of N10, 000.00 and above made through any bank platform.
According to him, under the Finance Act, 2020, Electronic Stamp Duty was replaced with Electronic Money Transfer Levy, adding that there is nothing in the provisions of the Finance Act, 2020, that renders Section 4 (2) of the Stamp Duties Act, as amended, ineffective.
He opined that the Finance Act, 2020, further amended the Stamp Duties Act, by the introduction of a new Section 89A, which introduced an Electronic Money Transfer Levy on electronic receipts or transfers in banks or financial institutions.
He said that it did not abrogate the original Section 89, which is still effective and subsisting.
He added that the new Section 89A of the Finance Act, 2020, also did not render the provisions of Section 4 (2) of the said Stamp Duties Act, ineffective, as, according to him, any “Transfer Levy” paid by individuals on transfers between persons or individuals is still to be collected by the relevant tax authorities in the various federating States of the Federation.
For him, the change of nomenclature from duty to levy does not in any way remove the powers of the “Relevant Tax Authorities” in the federating States of the Federation, to charge and administer duties/levies paid by individuals on qualified chargeable instruments initiated and executed or transactions initiated and carried out between persons or individuals in the various federating States of the Federation under Section 4 (2) of the Stamp Duties Act, 2004, as amended.
He said: “It therefore, follows that the various federating States of the Federation are clearly entitled, pursuant to Section 4 (2) of the Stamp Duties Act, as amended by Section 53 (b) of the Finance Act, 2019, and Section 89, as amended by Section 54 of the Finance Act, 2019, as well as the new Section 89A of the Finance Act, 2020, to demand from Deposit Money Banks and Financial Institutions, remittance of stamp duties on qualified chargeable electronic transfers, teller deposits, and other qualified dutiable instruments initiated and executed between persons or individuals, whose accounts are domiciled within the territory of each of the various federating States of the Federation.
“Deposit Money Banks and Financial Institutions should be directed to henceforth start remitting qualified chargeable stamp duties/EMTL accruable to the different federating States of the Federation, pursuant to Section 4 (2) of the Stamp Duties Act, as amended, to the “Relevant Tax Authorities in the various federating States of the Federation as applicable.”
Ubani said: “We hereby call on the Executive Chairman to prevail on the Deposit Money Banks, Financial Institutions, and all those involved in the collection of stamp duties/electronic money transfer levies to create a transparent software application dashboard that would be able to show, online real-time, daily stamp duties/EMTL collections by banks and other financial institutions, pursuant to Section 4 (1) and 4 (2) of the Stamp Duties Act, to enable all concerned, including the various federating State Revenue Tax Authorities, to access the information online real time, in order to overcome the challenges surrounding the collection of stamp duties/EMTL in Nigeria.
“We urge all Federal Government Institutions, Deposit Money Banks and individuals involved, to be more transparent, observe and obey the Rule of Law on stamp duties/EMTL collection, recovery and distribution, as enshrined in the relevant provisions of the Constitution of the Federal Republic of Nigeria, 1999, as altered, and Stamp Duties Act, 2004, as amended.
“We appeal to the Executive Chairman, to please write and direct the Deposit Money Banks and other Financial Institutions to immediately begin to remit qualified chargeable stamp duties/EMTL accruable to the different federating States of the Federation, pursuant to Section 4 (2) of the Stamp Duties Act, as amended, to the “Relevant Tax Authorities in the various States of the Federation as applicable please.”