Stand up, collectively demand for Stamp Duties revenues, consultant tells 36 state govts

Managing Consultant/Chief Executive Officer, Maroct Consultants Group, Chief Ubani, Uzoma Francis, (FCTI), has called on the 36 Governors in Nigeria to stand up and collectively demand for the Stamp Duties revenue without fear or favour, adding that it is their Constitutional Right to do so.

He opined that all the stamp duties revenue belongs to the different states of the Nigerian federation.

Ubani spoke in Abuja on ‘Stamp duties: Practical approach on fostering united front on issues bothering on the collective interest of the States,’ during a meeting of the Nigerian Governors Forum on Tuesday, March 15, 2022.

He stated that said that the Federal Government of Nigeria through the Federal Inland Revenue Service, is only an agent to states on collection of stamp duties.

According to him, the different states of the Federation should take note that, in respect of the collection of stamp duties/levies revenue in Nigeria, the states are the principals; while the Federal Government (FG) through the Federal Inland Revenue Service, (FIRS) is only “Constitutionally designated collection agent.”

He said consequently, the FG/FIRS is accordingly mandated by the provisions of Section 163 (b) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, which, according to him, means that FG/FIRS is obliged to follow the strict dictates and spirit of the said constitutional provisions.

He said the alleged orchestrated deception, unfair, and unwholesome collection practices should stop, particularly in the payment of the net proceeds of the duties/levies collected, to the different states of the federation in compliance with the constitution which is the supreme law of Nigeria.

Ubani, who is also member, Taxation Standards and Practice Monitoring Committee of the Chartered Institute of Taxation of Nigeria opined that there are unnecessary controversies or implementation of the Act.

He stated that there is circular of the Central Bank of Nigeria with Ref: CBN/GEN/DMB/02/006 dated 15/1/2016; sCBN circular with Ref: PSM/DIR/CON/CWO/07/066, dated 8/5/2020, and CBN circular with Ref: PSM/DIR/CON/CWO/08/022, dated 5/6/2020, that initially directed all Deposit Money Banks (DMB’s) to remit all Stamp Duties collected to CBN NIPOST STAMP DUTY COLLECTION ACCOUNT, and then subsequently directed all Deposit Money Banks (DMBs) to remit all Stamp Duties collected to FIRS Stamp Duty TSA Account 3000103686 domiciled with Central Bank of Nigeria.

He added that there is also FIRS press release captioned: “Clarification of Administration of Stamp Duties in Nigeria”, dated 20/7/2020, that stated in paragraphs 5 (iii) and (iv) thereof, 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.

He further said there is 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.”

Ubani said, “It is our position that both the “CBN said Circulars” and “FIRS said Press Release” can only be read and applied in conformity with the Stamp Duties Act, 2004, as amended, otherwise, it will be null, void and of no effect whatsoever. This our position is because the said “CBN Circulars” and “FIRS said Press Release” cannot be elevated to being capable of removing some provisions from the Stamp Duties Act, 2004, as amended, and the Constitution of the Federal Republic of Nigeria 1999, as altered. It is very unfortunate that the “CBN circulars” and the “FIRS Press Release” directed this obvious distortion and misrepresentation of the laws and facts, undermining the very clear separation of powers enshrined in Section 4 (1) and 4 (2) of the Stamp Duties Act, 2004, as amended by Section 53 (a) and 53 (b) of the Finance Act, 2019 respectively, as well as Section 163 (a) and (b) of the said Constitution.

“We still confidently maintain that it is the right of the “Relevant Tax Authority” in a State, to collect stamp duties/levies on transactions initiated and carried out through the banking platform, between persons or individuals, while the power vested in FIRS by the said Stamp Duties Act, is on transactions initiated and carried out through the banking platform, between two companies, or between a company and an individual, group or body of individuals only.

“The said CBN circulars and FIRS said press release is inconsistent with the provisions of the Stamp Duties Act, and Constitution, therefore, not correct, as wrongly stated in the said FIRS Press Release, that such power given to the different State Governments, through their respective “Revenue Authorities”, to administer stamp duties by ensuring the assessment, collection and accounting for stamp duties between persons or individuals into the different State Governments’ Revenue Accounts, does not include qualified chargeable instruments initiated and executed or transactions initiated and carried out through the banking platform.”

He added, “It is very clear that from the above proviso to paragraph 7, the said FIRS Press Release recognized that electronic transfer of money initiated by an individual and received by another individual is not a banking transaction to which any bank is a party. Therefore, the various arguments in some quarters, favoring banks being a party to all transactions carried out through its platform is contradictory, baseless, suspiciously intended to deceive and deviously usurp the powers of the “Relevant Tax Authorities” in different States of the Federation, as it is obviously not the accurate and consistent position of the law, even when it is clearly and conspicuously written in the said FIRS Press Release mentioned above.

“However, not minding the very obvious, glaringly stated and incontrovertible fact, that every transaction initiated and carried out by persons and individuals are meant for the “Relevant Tax Authority in a State”, in line with the provisions of Section 4 (2) of the Stamp Duties Act, 2004, as amended by Section 53 (b) of the Finance Act, 2019, yet the various DMB’s went ahead, with impunity, to treacherously usurp the powers conferred on the States’ “Relevant Tax Authorities” deliberately, in total defiance with the provisions of the law and to the detriment of the “Relevant Tax Authority” in different States of the Federation.

“The fact that the said FIRS Press Release clearly stated that the account to which Deposit Money Banks in Nigeria should be remitting the stamp duties into; is the said FIRS account, that is a Federation account, which according to the said Press Release, the revenue accruing therein is distributed monthly to the three tiers of governments in Nigeria through FAAC meetings, is unfounded and unconstitutional.

“The foregoing is a blatant misinformation, suspiciously intended at deceiving the general public and a clear violation of the provisions of the Constitution of the Federal Republic of Nigeria, 1999, as altered, because “Federation Account” is a creation of Section 162 of the said Constitution, which is a revenue account to be distributed under Section 162 of the said Constitution and does not in any way include STAMP DUTIES.

“Therefore, the said proviso to paragraph 7 of the said FIRS Press Release, is contradictory and totally inconsistent with the provisions of Section 163 of the Constitution of the Federal Republic of Nigeria, 1999, as altered. The said FIRS Press Release are neither laws, nor regulations, but are merely for information of general public and in particular all taxpayers’ representatives or advisers and the staff of Revenue Service. They contain what the makers consider to be their interpretation of the various Nigeria Tax Acts, particularly Section 4 of the Stamp Duties Act, 2004, as amended, and thus constitute only the opinion of the makers on a point of law with no legally binding effect.”

Ubani said, “What we have done in this matter of STAMP DUTIES, is that we extensively researched the provisions of the Stamp Duties Act, and the constitutional provisions, as it concerns the Stamp Duties Act, and our research revealed a very solid and strong ground, in favour of the different States of the Federation.

“We decided to hold on to that strong and firm ground discovered in the provisions of the 1999 Constitution of the Federal Republic of Nigeria, as altered, not deterred by the overwhelming threat coming from different quarters, in form of Letters and/or Circulars on stamp duties from CBN, Press Release on stamp duties from FIRS, Newspaper Publications on stamp duties from NIPOST, and Letters on stamp duties from the office of the Attorney General of the Federation.

“It was Mahatma Gandhi who said, and I quote: “Many people, especially ignorant people, want to punish you for speaking the truth, for being correct, for being you. Never apologize for being correct, or for being years ahead of your time. If you are right and you know it, speak your mind. Even if you are a minority of one, the truth is still the truth.’

“Consequently, it is our fervent belief that the truth shall prevail at the end.”

He added, “We, therefore, the different States of the Federation, to form a united front and demand for the stamp duties revenue that rightly belong to you by the very clear provisions of the Constitution of the Federal Republic of Nigeria, 1999, as amended. “Having now known your strong ground on stamp duties revenue, we urge you to be united and firmly hold on to it.”

The tax consultant said that Stamp Duties Revenue streams are a highly technical area of taxation that is very much misunderstood and very highly misinterpreted by many.

He advised that State Governments should be very careful in engaging technical support/advisers in the area of Stamp Duties Revenue Head, as according to him, many that profess, they know, are allegedly misunderstanding and misinterpreting the provisions of the Stamp Duties Act and the provisions of the Constitution of Federal Republic of Nigeria, 1999, as amended, as it concerns stamp duties.

Ubani said, “The different State Governments are strongly advised and enjoined, as a matter of urgency, to seriously-overhaul, review and domesticate Stamp Duties and Capital Gains Laws, in their various States, for effective and optimal collection of stamp duties and capital gains tax revenue in their different States.

“For quick and immediate wins: Section 115 of the Stamp Duties Act, empowers the Governor of a State to make Regulations to the further and better carrying into effect of the objects and purposes of this Act, among others.

“There is urgent need to provide technical training and capacity development for tax administrators and key staff of the States Internal Revenue Service for efficient service delivery and to avoid misinterpretation and arbitrariness.”

He added, “The different states of the Federation, should take note that, in respect of the collection of stamp duties/levies revenue in Nigeria, the states are the principals; while the FG through the FIRS, is only “Constitutionally designated collection agent.” Therefore, the FG/FIRS is accordingly mandated by the provisions of Section 163 (b) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, which means that FG/FIRS is obliged to follow the strict dictates and spirit of the said Constitutional Provisions. The orchestrated deception, unfair, and unwholesome collection practices should stop, particularly in the payment of the net proceeds of the duties/levies collected, to the different states of the Federation in compliance with the Constitution which is the supreme law of Nigeria.”