We shall discuss new trends in stamp duty charges under the Finance Act, 2019
The Finance Act, 2019 amended some provisions ofthe Companies Income Tax Act, Petroleum Profit Tax Act, Personal Income TaxAct, Value Added Tax Act, Customs and Excise Tariff etc. (ConsolidationAct), Capital Gains Tax Act and StampDuty Act.
Sections 52 to 56 of the Finance Act, 2019amended Sections 2, 4, 89 and the Schedule of the Stamp Duty Act, 2004. Section55 of the Finance Act, 2019 deleted Section 90 of the Stamp Duty Act, 2004.
We shall discuss new trends in stamp duty chargesunder the Finance Act, 2019.
Modern innovations on stamp duty under the Finance Act, 2019
Section 52of the Finance Act, 2019 amended Section 2 of the Stamp Duty Act, 2004 toextend the meaning of “stamp” toinclude “an electronic stamp orelectronic acknowledgment” for denoting any duty or fee. Again, theprovision extended the meaning of “stamped”to include “instruments and materiallytagged with electronic stamp or national stamp on an electronic receipt”.The meaning of “instruments” isextended to “electronic documents”.
Similarly,Section 54 of the Finance Act, 2019 amended Section 89 (1) of the Stamp DutyAct, 2004 to include “electronicinscription whereby any money” is paid within the meaning of “receipt” for the purpose of stamp dutypayment. Section 89 (2) is introduced toprovide for “digital tag with electronicstamp or any acknowledgement of duty charged on an electronic transaction”.
Section 89(3) is also introduced to provide that “electronicreceipt or electronic transfer for money deposited in any bank” of N10, 000 (ten) naira and above paid by theowner of the account shall be charged a one-off duty of N 50 (fifty) naira.
Who is the competent charging authority?
UnderSection 53 of the Finance Act, 2019 which amended Section 4 of the Stamp DutyAct, 2004, the Federal Inland Revenue Service (FIRS) is the competent authorityto charge duties on instruments between a company and an individual, group orbody of individuals.
Therelevant tax authority in a State is the competent authority to charge duties oninstruments between persons or individuals within the respective States of theFederation.
The FIRSis empowered to collect stamp duties on all banking transactions though itsagents; Banks and other Financial Institutions.
How much is the duty on electronic receipt or electronic transfer?
By theprovisions of Section 54 (3) of the Finance Act, 2019, a one-off duty of N 50.00 (fifty naira) shall accrue foramounts from N 10, 000 (ten naira) andabove. Nevertheless, duty shall not accrue where a person pays or transfersmoney electronically between his accounts within the same Bank.
What are chargeable transactions?
Instrumentssuch as agreements, contracts, receipts, memorandum of understanding,promissory notes, insurances policies and other transactions listed in theSchedule to the Stamp Duty Act, 2004 are subject to stamp duty.
Exempted transactions under the Finance Act, 2019
Section 56(a) of the Finance Act, 2019 amended the Schedule of the Stamp Duty Act, 2004to include exempt receipts as “receiptsgiven by any person in a Regulated Securities Lending Transaction carried outunder regulation issued by the Securities and Exchange Commission”.
Section 56(b) of the Finance Act, 2019 amended the Schedule of the Stamp Duty Act, 2004 andprovided that shares, stocks orsecurities returned or transferred by a lender to its approved agent or aborrower in furtherance of a Regulated Securities Lending Transaction as wellas documents relating to regulated securities lending transactions carried outunder regulations by the Securities and Exchange Commission (SEC) are exemptedfrom stamp duty.
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