INTRODUCTION The Central Bank of Nigeria (CBN), as a major stakeholder in the regulation of Nigerian economy, has joined in the search for a way to save the country’s economy and has come up with a circular to all deposit money banks (DMBs) and other financial institutions in Nigeria, titled “Collection and remittance of statutory charges on receipts to Nigeria postal service under the Stamp Duties Act”. The Circular dated 15th Jan, 2016 was made available to the public on the 19th of Jan, 2016.

1. GIVING NIPOST POWER TO
COLLECT STAMP DUTIES
(TAX) REVENUE STANDS
AGAINST LOGIC, STAND
AGAINST THE LAW
[DECEMBER 10, 2019]
[ABIMBOLA KASALI]

2. INTRODUCTION
The Central Bank of Nigeria (CBN), as a major stakeholder in the regulation of Nigerian
economy, has joined in the search for a way to save the country’s economy and has
come up with a circular to all deposit money banks (DMBs) and other financial
institutions in Nigeria, titled “Collection and remittance of statutory charges on receipts
to Nigeria postal service under the Stamp Duties Act”. The Circular dated 15th
Jan, 2016
was made available to the public on the 19th
of Jan, 2016.
This was the beginning of a long journey which has taken concerned stakeholders
through the journey to the High Courts, Court of Appeal and supposedly amendment to
the Stamp Duties Act in 2016 which is yet to be assented to by the President.
THE STAMP DUTIES ACT
Stamp Duties are basically taxes paid to the Federal or State Government on documents
(also known as instruments for the purpose of the Stamp Duties Act) such as
Conveyances on Sale, Bills of Exchange, Promissory notes, Agreements, Contracts or
even documents such as Letters and Certificates of admission, Instruments of
Apprenticeship, Insurance Policies etc. The payment of Stamp Duties is backed up by
legislation - the law being the Stamp Duties Act 1939 (as amended by numerous Acts
and various resolutions and contained in Vol 22 Cap 411 LFN 1990) which also provides
a list of documents in its Schedule and the duty payable on each of them.

3. The legal effect of a document which is duly stamped according to S.19 of the Stamp
Duties Act (SDA)is basically that it will be admissible in evidence in a Court of Law. This
excludes documents given as evidence in criminal proceedings and all just exceptions
on other grounds (S22 (1)&(4) SDA). It is advised therefore that Stamp Duty is paid on
documents required to be stamped because you never know when a transaction could
end up in Court. However, S.22 of the Stamp Duties Act also provides terms on which
instruments not duly stamped may be received in evidence; where a Judge, Referee or
Arbitrator finds a document is insufficiently stamped, payment of the unpaid duty, as
well as the penalty payable thereon and a sum of two naira may be made to the officer
of the court or arbitrator or referee and received in evidence.
The Stamp Duties Act requires that all written instruments, including instances where
any property or interest in property is or are transferred or leased to any person, must
be stamped.
Generally, Stamp Duties is charged at the rate of 75 kobo for every N200 of the
consideration of certain real estate transactions like mortgages, while for conveyances
or the transfer or sale of real property, the stamp duties rate is 75kobo for every N50.
The Stamp Duties rate for lease and rental agreements is 16kobo for every N200 of the
consideration of the lease or rental agreement.

4. Any written document that is not stamped is not allowed to be received in any judicial
proceeding in Nigeria until the stamp duty and the resulting penalty for the non-
payment of the stamp duty is paid.
The complex nature of collecting stamp duties as it relates to contract notes was once
confused in the stock market with stockbrokers claiming that they are being threatened
by the Federal Inland Revenue Service (FIRS) and Nigerian Postal Service (NIPOST).
However, the controversial issues had since been resolved. For the purpose of
clarification, the provisions in the Stamp Duty Act which prescribe that stamp duties on
certain categories of documents such as agreements, contract notes among others,
could be denoted by adhesive stamps is a demonstration of government concern for
cost efficiency achievable through lower compliance cost and minimal cost of
administration. This arrangement of convenience does not in itself imply the ceding of
FIRS stamp duties collection responsibility to any agency. The responsibility for stamp
duty collection is solely vested on FIRS. With specific reference to the collection of
duties on contract notes, FIRS is to collect all stamp duties payable through the
Commissioner of Stamp Duties, while NIPOST engages in the supplies of adhesive
stamps where the duty payer excises the option to do so.
There are fines and other penalties for any failure to pay stamp duties on any written
instrument that is not exempted from the payment of stamp duty.
HOW NIPOST GOT INVOLVED

5. There was a circular from the Central Bank of Nigeria to all Deposit Money Banks. This
was consequent upon the case instituted by Kasmal International Services Ltd against
the Central Bank of Nigeria (CBN) and 23 Deposit Money Banks (DMBs) in the country
which was in the favour of the Plaintiff.
The circular provides that with immediate effect, all Deposit Banks (DMBs) and other
financial institutions should commence the charging of N50 per eligible transaction for
receipts given by any bank or other financial institution in acknowledgment of services
rendered in respect of electronic transfer and teller deposits from N1000 and above. The
charges is said to be in accordance with the provisions of the Stamp Duties Act and
Federal Government Financial Regulations 2009.
COLLECTION OF STAMP DUTIES – LOGIC OR LAW
NIPOST is spearheading a bill for an Act to amend the Stamp Duties Act, Cap.S8, laws of
the Federation of Nigeria 2004, to ensure compliance with current realities and for
related matters.
The controversial bill, which emanated from the House of Representatives, was passed
by the House and referred to the Senate for concurrence of the 8th
National Assembly.
The bill sought the amendment of Section 2 of the principal Act by changing the
definition of “Stamp” and addition of the definition of words “Proceeds” and “Stamping
Protocol”

6. The bill also sought the amendment of Section 5 of the principal Act by substituting the
word “may” for “shall” in Section 5(2) to read “Where the duty may be denoted by
adhesive stamp, Postage Stamps shall be used for the purpose.”
It further seeks amendment of Section 89 of the principal Act in sub 2 to change “may”
to “shall” to read “For the purposes of the Act, all income from denotation of receipt,
document or instrument with postage stamp shall be known as Stamp Proceeds.”
The FIRS representative said that the Service was opposed to the bill in its entirety
because NIPOST wanted to usurp its statutory function. It stated further that the Act
NIPOST sought to amend affects the 36 states of the Federation “and for the
amendments to pass, 36 states of the Federation must be around to make their input.”
It noted that the Stamp Duties Act is a tax legislation which has nothing to do with
NIPOST. The subsisting Stamp Duties Act gave the Federal Government and states the
leeway to generate revenue and has nothing to do with post office and that the
proposed amendment aimed at eroding the statutory powers of the FIRS. “FIRS was
given a law to administer which includes Stamp Duties Act. Item 96 of FIRS Act is the
administration of Stamp Duties Act. What is the mischief of NIPOST in amending the
law? Stamp Duty is a form of tax. All NIPOST is seeking is to usurp the power of the FIRS
and the 36 states. It should not be allowed.” The Ministry of Finance adopted the
position of FIRS on the bill and sought periodic review of the rate of stamp duty.

7. The only argument adduced by NIPOST for the amendment of the Act was that the
Stamp Duties Act became necessary because the law has become obsolete and no
longer relevant to meet the challenges of modern day. That is, NIPOST was only asking
to be allowed to sell stamp either manually of electronically.
“We are seeking the amendment of the Act to include sale of postage stamp. We are
not collecting tax. It is in the interest of Nigeria to draw a line between duty and stamp.
We want to sell our stamp.”
CONCLUSION
The Stamp Duties Act, Cap S8, LFN 2004 provided for the levying of stamp duties on any
agreement executed in Nigeria or relating whatsoever to any property situated in or any
matter as specified in the Act. The Act never envisaged collection by Nigerian Postal
Service (hereinafter referred to as NIPOST) because states have no control over NIPOST.
It is purely a federal agency.S.4 of the Act states that:
The Federal Government shall be the only competent authority to impose charge and
collect duties upon an instrument if such instrument relates to matters executed
between a company and an individual, group or body of individuals.

8. The State Governments shall collect duties in respect of instruments executed between
persons or individuals at such rate to be imposed or charged as may be agreed with the
Federal Government.
These sections show clearly the separation of powers between the Federal Government
and State Governments with respect collection of stamp duties. In the case of Union
Trustees Ltd v Attorney General of the Federation and Anor (1990 FHCLR 45 at 51, the
Supreme Court affirmed that “it is, in fact, clear by the provisions of S.163 that capital
gains and stamp duties are supposed to be paid, when applicable to the states from
which they are derived and not for the benefit inter alia of all the states, which will be
the case where the tax and duties are paid into the federation account (see S. 162(3) of
the Constitution)”.
It is evident that the use of adhesive stamps, impressed stamps and postage stamps is
an option. The states could use their own adhesive revenue stamps based on S. 4(2) of
the Stamp Duties Act in the course of collection of stamp duty revenue through their
revenue agencies.
The Stamp Duties Act also empowers the relevant Federal or States Civil Service
Commission the power to appoint one or more Officers as Commissioner for stamp
Duties to adjudicate, assess, stamps or embosses and take custody of the dies and
adhesive stamps. Nowhere in the Act was NIPOST mentioned nor referred to in the
throughout the Stamp Duties Act.