Here’s so­lu­tion to banks il­le­gal stamp duty de­duc­tions

Business Day (Nigeria) - - NEWS - HOPE MOSES-ASHIKE

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.

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