Banks awaiting CBN’s directive to end stamp duty collection


November 30, 2016 | 12:43 am
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That deposit money banks (DBMs) are still deducting N50 stamp duty after the Court of Appeal judgement should be a much concern to Nigerian bank customers.

The banks commenced the deduction of stamp duty in January this year following a circular from the Central Bank of Nigeria (CBN), directing them to deduct N50 from eligible deposit transaction from N1,000 and above.

The CBN had explained that the implementation of the stamp duty came from a Federal High Court order that the CBN should direct the DMBs under its supervision to commence the collection of the duty on behalf of the Federal Government, in compliance with the provisions of the Stamp Duty Act 2004 and the Federal Government of Nigeria Financial Regulation of 2009.

However, Justice Ibrahim Saulawa and four others justices of the Court of Appeal, Lagos Judicial Division, who ruled on an appeal filed by Standard Chartered Bank against Kasmal International Services Limited and 22 others, held that the Stamp Duties Act, 2004 did not impose a duty on Deposit Money Banks to deduct N50 on deposits.

One would have expected banks to suspend the deduction of the stamp duty after the judgment but nothing of the sort happened. Olayinka David-West, academic director and senior fellow in information systems, Lagos Business School, Pan-Atlantic University, admitted that in spite of the court ruling and explanation of the Stamp Duties Act, the banks are yet to receive the Central Bank circular discontinuing the practice. “Thus, unfortunately, the banks cannot stop the collection without express authority from CBN. For them, it would be an act of contravening the CBN circular,” she said in an emailed response to BusinessDay.

Reacting to this, Taiwo Oyedele, partner/head of tax, PWC, said “It is expected that banks will stop charging the stamp duties on deposits on the basis of the Appeal Court judgement. However, it may be premature to start talking about refund until final determination of the dispute by the Supreme Court.”

He said in an email response to BusinessDay that where the funds have been remitted to government and already shared, it will be difficult to get a refund given the current dire financial situation facing government at all levels.

The Apex bank had in a circular directed banks to deduct N50 for stamp duties on every deposit into a current account of N1,000 and above from January 1, 2016.

Investigation revealed that banks are charging N50 on both current and savings accounts. They also deduct stamp duty from salary accounts and on the depositing end of the transaction which is contrary to CBN’s directive of receiving end.

“It is wrong to charge the N50 stamp duty on savings account as this is specifically exempted or against a depositor’s balance rather than the recipient of funds.

The first step to take should be to formally complain to the bank as this may have been done in error in which case the charges have to be reversed but if it is confirmed to be deliberate, then the issue should be escalated to the CBN and NIPOST. If still unresolved, then it should be challenged legally through the court system,” Oyedele said in an emailed response.



November 30, 2016 | 12:43 am
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