As FIRS Intends to Charge N50 Stamp Duty on Transactions Above N10,000, Will Nigerians Voluntarily Declare Their Transactions?

In a circular that was released in May, the Federal Inland Revenue Service (FIRS), announced that stamp duty will now be attached to electronic messages that show that money was transferred from someone to another person.

“Any electronic receipt for, or electronic transfer of money deposited with any bank or with any banker in any type of account of an amount from N10,000 upwards shall attract a singular or one-off duty of the sum of N50,” Muhammad Nami, executive chairman of the FIRS said on the tax agency’s website.

What does this mean for you and me?

If you send money to someone through whatever means, and then inform the person of the transfer through a Whatsapp message, short message service (SMS), email, instant messages (IM), or any other electronic form, you are liable to a stamp duty of #50.

Maybez Ltd’s chief accounting officer, after receiving a cash payment of N500,000 from Mr. Tolu on behalf of Maybez Ltd., composed a message which reads: ‘receipt of N500,000 is hereby acknowledged’ and sent same to Mr. Tolu via WhatsApp messenger. In this case, the WhatsApp message acknowledging the receipt of N500,000 constitutes a receipt for which stamp duty is payable.

FIRS

According to tax agency, Mr Tolu in the example above is required to make a disclosure of the details of the transaction using FIRS e-stamp duty platform or to the relevant stamp duties Commissioner. This will lead to assessment and payment of appropriate stamp duties and a consequential issuance of a stamp duty certificate or an acknowledgement.

Will Nigerians Voluntarily Declare Transactions and Pay N50 Stamp Duty to FIRS?

“Such certificate or acknowledgement will suffice as evidence that stamp duties have been paid and that the electronic receipt has been stamped appropriately.”

In the case of a business transaction, the circular says, “stamp duty upon receipt (written, printed or in electronic form) for transactions between corporate bodies or between a corporate body and an individual, group or body of individuals, which amounts to N10,000 and above, shall be denoted by payment of N50 per receipt to the service.”

The fee is not limited to bank transfers as it also applies to POS receipts, fiscalised device receipts, Automated Teller Machine (ATM) print-outs etc.

The FIRS expects people to tender details of transactions on the e-stamp duty page if the transaction is above #10,000 regardless of the type of account money was paid into. It is not likely that a lot of Nigerians will willingly head to the site to declare their transactions and pay the stamp duty.

This begs the question, short of going through banks, how does the agency want to know when transactions above #10,000 are made and communicated to the receiver on Whatsapp? The chat platform is end-to-end encrypted, which means that chats cannot be accessed by a third party.

Price Waterhouse Coopers (PWC), a global tax consultancy company expressed the same sentiments, insisting that practicability and enforcement would be a major problem with this new stamp charges.

The practical application of this is doubtful and even where the FIRS attempts to enforce this, taxpayers may challenge the FIRS’ definition of the term, as the Act itself does not provide a definition

PWC

It remains to be seen how the FIRS intends to monitor electronic messages, many of whom are protected, in its bid to decide who should pay a stamp duty or who shouldn’t. It also remains to be seen how it would compel Nigerians to voluntarily log themselves into its e-portal to pay a sum of money over something as minute as a piece of information transmitted over WhatsApp.


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