Here’s solution to banks illegal stamp duty deductions
The untold hardship bedevilling Nigerians is worsened by illegal stamp duty and sundry deductions by banks as customers go to social media to cry out.
Stamp duty is applicable on all dutiable instruments, such as agreements, contracts, receipts, memorandum of understanding, promissory notes, insurance policies and other instruments stipulated in the Schedule to the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria 2004 (as amended) (SDA or “the Act”).
The Finance Act, 2019, expanded the scope of the SDA to include technology, e-commerce and cross-border transactions, in line with global practices and current economic realities.
KPMG summary of Federal
Inland Revenue Service (FIRS) guidelines indicates that a fixed-rate of N50 FIRS’ adhesive stamp is applicable on all receipts. Also, electronic transfers above N10,000 through the Deposit Money Banks (DMBS) will attract a stamp duty of N50, which the DMBS are obliged to remit to the FIRS.
The Service recently announced that a total of N66 billion was generated as Stamp Duty charges for the period of January to June 2020.
Here are some of the complaints from customers
“I had a funny experience with this stamp duty some time back. I did a transaction, got debited (the amount+charges) and they collected stamp duty. Transaction didn’t go through. After complaining to the bank, it was refunded. They still collected stamp duty on the refund,” a customer tweeted.
Sharing her experience with Businessday, one Mrs. Aneke, could not hold it but burst out in anger, “what is wrong with this bank? The middle-aged woman who lives in Festac was offset by stamp duty deductions from her account even when she did not do any transaction.”
A customer with Twitter account name Oluwa Jidex, wrote Firstbank, saying “SMS charges were deducted from my account and to check my balance this morning it amazes me that N50 was deducted again as stamp duty... this charges are becoming unbearable... pls look into this ASAP”.
Another customer, Michael Koublanou, said, “Sterling charged me stamp duty, they come charge VAT on the stamp duty charges as well”.
Isaac Archibong, a customer of Fidelity Bank plc, tweeted, “Please you people should stop deducting money from my account in the name of stamp duty... N100 was deducted yesterday and N50 again this evening, let this madness stop please”.
Responding to Archibong, Fidelity Bank said, “Thank you for contacting us. Please be informed that Stamp duty is Statutory/levied to the Federal Government as regulated by CBN, this was official in 1st February, 2020. The charges are done on all deposit/inflow/ transfer from N10,000 and above”.
“On the issue of stamp duty, I feel it is an aberration to charge the same fee from somebody that receives N1000 and another that receives N1 million. Too many issues in the stamp duty policy of the CBN that make it look like the apex bank is allowing the banks to extort, even poor Nigerians
trying to save their meagre earnings,” a customer who maintains account with Access Bank and Gtbank said.
Wole Obayomi, a partner/ head of Tax, Regulatory and People Service (TRPS) practice of KPMG in Nigeria, says customers who are illegally charged stamp duty should ask for a refund.
“Customers should complain to FIRS and ask for a refund because it is an error,” he says on phone.
When contacted, Uju Ogubunka, president, Bank Customer Association of Nigeria (BCAN), notes that if any bank deducts more than what the law says that is wrong. Such a bank can be made to pay back.
“Taxes can be graduated. It is not as if because the amount is heavier therefore you are made to pay higher. For stamp duty, the more money you generate, the lesser the amount you pay,” Ogubunka says, saying, “We don’t have any Complaints from our end. If we have we will be able to deal with it.”
Uche Uwaleke, a professor of capital market at the Nasarawa State University Keffi, explains that Section 54 of the Finance Act, which amended S. 89 of the Principal Act provides for stamp duty of N50 on transfers in excess of N10,000.
The justification is the fact that the charge is singular and one-off with N10,000 as the floor. Note that it does not apply to self-transfers or between accounts with same BVN
The revenue from stamp duties must have witnessed significant increase since the implementation of the Finance Act. The surprised increase in Federal Allocation Account Committee (FAAC) revenue for the month of June was due more to increase in taxes than crude oil sales.
What has become obvious is that a good proportion of previous deductions were not remitted to the coffers of the government, a situation not helped by the bickering between FIRS and NIPOST.
Now that the Finance Act has laid to rest the issue of the collecting agency in favour of FIRS, the level of remittances is expected to substantially improve, which explains why the government is banking on revenue from stamp duties to augment dwindling oil revenue.
Regarding illegal deductions by banks, customers should take advantage of the complaints mechanism/procedure put in place by the CBN.
“I am aware the CBN has been sanctioning banks and recovering illegal deductions in respect of cases escalated to the central bank,” Uwaleke states.