House of Representatives Pass Bill Endorsing Stamp Duty on Bank Accounts

The House of Representatives has passed a new Stamp Duty Bill, which seeks to amend and repeal the 2004 Stamp Duty Act.

With the passage of the bill, the lawmakers have endorsed the controversial deduction of N50 from deposits into accounts with Deposit Money Banks (DMBs) across the country using electronic platforms.

Contents of the Bill

The new bill raised the threshold for the collection of stamp duty on bank deposits from N1,000 to N3,000. However, accounts related to the education of children are exempted from stamp duties. Additionally, the bill seeks to legitimize the recent inclusion of savings accounts as eligible for the imposition of stamp duty, even though the Central Bank of Nigeria (CBN) had previously excluded savings accounts from stamp duty collection in its memo on the matter.

What Are Stamp Duties?

Stamp duties refer to all receipts given by banks or financial institutions as acknowledgment of services rendered in respect of electronic transfers and teller deposits of N1,000 and above. Charges also include those related to court processes, statements at police stations, land title documents, agreements, among others.

The Stamp Duties Act, Chapter S8, Laws of the Federation of Nigeria (LFN) 2004 (SDA), provides the legal basis for the imposition and collection of stamp duties in Nigeria.

Enforcement Has Been Controversial

Although the 2004 Stamp Duty Act approved the fixing of N50 stamp duty on documents witnessing transactions worth N1,000 and above, the law became controversial when banks were directed to deduct N50 from deposits of N1,000 and above in bank accounts.

Based on the 2004 Act and a circular issued by the Central Bank of Nigeria in January 2016, banks operating in the country have been deducting N50 from deposits in bank accounts across the country.

In a ruling on an appeal filed by Standard Chartered Bank against Kasmal International Services Limited and 22 others, Justice Ibrahim Saulawa and four other justices of the Court of Appeal, Lagos Judicial Division, held that the Stamp Duty Act, 2004 did not impose a duty on DMBs to deduct N50 on bank deposits. According to the court, electronic transactions are not covered by the Stamp Duty Act.