Nigeria: Consultant – Expunge Law Empowering Finance Minister to Collect, Administer Stamp Duties

Nelita Collins

Abuja — A consultant, Mr. Uzoma Ubani has written the Attorney General of the Federation (AGF) and Minister of Justice, Mr. Abubakar Malami, faulting the 2021 Finance Act, which empowers the Minister of Finance to collect and administer Stamp Duties in the country.

In the letter dated January 7, 2022, Ubani claimed specifically that Section 27 of the Finance Act 2021, runs contrary to the Stamp Duties Act as well as the constitution, hence the need to expunge the law in its entirety.

“We respectfully write to bring to your attention and inform you that the provisions of Section 27 of the Finance Act, 2021, which took effect on January 1, 2022, is in conflict with the provisions of Sections 3 (3), 111, 115 and 116 (2) of the Stamp Duties Act, 2004, as amended and also inconsistent with the provisions of Section 163 of the Constitution of the Federal Republic of Nigeria, 1999, as amended and it is therefore null, void and of no effect whatsoever, as the powers purported to have been conferred on the Federal Minister of Finance, have already been conferred on the President or the Governor of a State under the above mentioned provisions of the Stamp Duties Act.

“More so, the distribution of Stamp Duties revenue is based on Derivation pursuant to the provisions of Section 163 of the said Constitution,” he said.

According to Ubani, only the stamp duties and Electronic Money Transfer Levy (EMTL) that is collected by the federal government through the Federal Inland Revenue Service (FIRS), pursuant to Section 4 (1) of the Stamp Duties Act, should be distributed according to derivation, pursuant to Section 163 of the constitution.

He disclosed that while the different states of the federation should collect stamp duties and EMTL, pursuant to Section 4 (2) of the Stamp Duties Act, the Deposit Money Banks (DMBs) and Financial Institutions have refused to comply with the law, based on the purported FIRS Press Release captioned: “Clarification of Administration of Stamp Duties in Nigeria” and the Central Bank of Nigeria (CBN) circulars referenced CBN/GEN/DMB/02/006, dated 15/1/2016, and PSM/DIR/CON/CWO/07/066 dated 8/5/2020, which according to him are not laws and have no binding effect whatsoever.

“Section 27 of the Finance Act, 2021, is a blatant illegality in a tainted legislation and it is therefore unconstitutional. The Minister cannot have such powers, neither does the National Assembly, without a Constitutional amendment. Therefore, the provisions as currently contained therein should be voided and expunged in its entirety.

“Section 1 (1) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, proclaims its supremacy. Section 1 (3) of the said Constitution further provides that if any law is inconsistent with the provisions of the Constitution, the Constitution shall prevail, and that other law shall, to the extent of the inconsistency be void”, part of the letter read.

Moreover, the letter further claimed that the provisions of Section 27 of the Finance Act, 2021, was aimed at or targeted at stamp duties accruable to the different states of the federation under Section 4 (2) of the Stamp Duties Act, 2004, as amended by Section 53 (b) of the Finance Act, 2019, and was therefore void to the extent that it purports to take over the administration and collection of stamp duties and EMTL under Section 4 (2) of the said Stamp Duties Act, in total disregard to the separation of powers enshrined in Section 4 of the SDA, and contrary to the provisions of Section 163 of the Constitution of the FRN, 1999, as amended.

Ubani also argued that even if the FIRS were to be the only competent authority to collect stamp duties and EMTL paid through the banks’ platform, such duties/levies collected are “not by law”, to be paid into the Federation Account as clearly stated in paragraph 7 of the said FIRS Press Release on Stamp Duties collections and remittances in Nigeria.

He submitted that all FIRS could do according to the law, was to return net proceeds of such collection to the states of “derivation” after deduction of administration costs, as fixed by the Fiscal Responsibility Act, as amended, and the recent Senate resolution.

“This being the case, it appears that the solution and only way out in the circumstance, is for Deposit Money Banks and Financial Institutions to start forthwith, to remit stamp duties and EMTL collected from instruments initiated and executed or transactions initiated and carried out between persons or individuals pursuant to Section 4 (2) of the Stamp Duties Act, directly to the states of the federation in line with the Law and the arrears distributed according to derivation to each of the different states of the federation.