Stamp Duty

What is Stamp Duty?

Stamp duty is a form of tax levied on single property purchases or documents. This includes the majority of legal documents such as cheques, receipts, military commissions, marriage licenses and land transactions.

 

Modern Stamp Duties

Prior to now, a physical stamp (a revenue stamp) had to be attached to or impressed upon a document to denote that stamp duty had been paid before the document was legally effective. However, more modern versions of the tax no longer require an actual stamp. This is part of the reason why the Finance Act 2020 modified some sections of the former Stamp Duty Act (SDA).

 

Items liable to Stamp Duties:

Notarial acts, agreements, conveyance of sale of land, powers of attorney, contract notes, valuations, capital or limited liability companies, bank notes, promissory notes, mortgage notes, share certificates, debentures, share warrants, insurance policy, customs bills of laden, bills of sale and receipts. etc.

 

Recent Changes in the Stamp Duties Act

According to the Finance Act, S.2 of the SDA have been amended to accommodate electronic and digital transactions in the definition of “stamp”, “stamped” and “instrument”. Based on the provisions of the Finance Act, instrument would now include electronic documents.[1]

 

In addition, the new S.89 (S) of SDA has imposed stamp duty of N50 on all single bank deposits of N10,000 and above [2]. There are exemptions for transactions between accounts held by the same bank customer and for salary accounts.

 

Footnote:

[1] SDA now accomodates electronic and digital transactions

[2] Stamp Duties of N50, is now charged on single bank deposit(s) of N10,000 and above.

 

Source: Richard Okunola