Partner in the Tax Regulatory and People Services practice of KPMG, Olanike James, in a recent chat has explained why the Stamp Duties Act (SDA), is still being delayed by the President for his assent.
It would be recalled that the bill has been passed by the National Assembly and has since been waiting for presidential assent which has called for serious concern.
Nike explained that though it is taking time but there is need for it to be well looked into as the Act was last amended in 1956.
According to her, “There are some instances of ambiguity particularly given that the Act was last amended in 1956. Therefore, I agree that the Act should be amended to reflect modern day realities.”
“However, a closer look at the Act could reveal more clarity on treatment of supposedly ambiguous transactions. Affected individuals are, therefore, advised to seek professional assistance with respect to their transactions that may be liable to stamp duties. Non-compliance may attract penal provisions under the Act, and the risk of the enforcement by the government through its relevant agency.
“The Stamp Duties Act is a subsisting tax Act, which is in force, and the FIRS has lately begun to drive compliance with its provisions, especially in industries like the insurance and banking industries.2
Speaking further on the issue, Nike stated that, “Currently, the Stamp Duties Act does not provide for the applicability of stamp duties to electronic transactions, however, the current amendment Bill at the National Assembly may make such transactions liable to stamp duties.
“The SDA is currently being amended by the National Assembly, although the proposed amendments are limited to particular topical issues such as electronic instruments, instead of a comprehensive overhaul.”
“The SDA is described as a 2004 Act because all the laws of Nigeria were last compiled in 2004 under the Laws of the Federation of Nigeria (LFN) project. The SDA provides for duties payable on certain transactions and instruments while the Transfer Pricing Regulations give guidance on treatment of related parties transactions. The SDA, however, provides certain reliefs for related party transaction.
“They are numerous, and include policy of insurance, bank cheques, property valuation document, mortgage agreement, lease agreement, issue or increase in share capital, etc. Such dutiable documents must be specified in the Act or its schedule.
“We are, however, aware that Banks currently charge N50 stamp duties on certain transfers, based on directive issued by the CBN but this is not supported by the SDA. Also there are penalties imposed for failure to stamp dutiable instruments,” she added.
Stamp duty is a levy imposed on certain documents and transactions, broadly known as instruments. The Stamp Duties Act (SDA) is the legal basis for the imposition of Stamp Duties in Nigeria.