N50 stamp duty by banks illegal – Lagos lawyer

The recent declaration by the court that N50 stamp duty on teller deposits or electronic transfer of funds is illegal is in order, frontline Lagos Lawyer, Fred Nzeako, has said.

A Federal High Court in Asaba presided over by Justice Nnamdi Dimgba, had given the verdict on December 9, in a case between a businessman, Rupert Irikefe, and the Central Bank of Nigeria (CBN), Zenith Bank, and the Attorney General of the Federation.

The CBN had on January 15, 2016 issued a circular titled: “Collection and Remittance of Statutory Charges on Receipts to Nigeria Postal Service under the Stamp Duties Act”, to all Deposit Money Banks and other Financial Institutions in Nigeria.

The initiative, according to the apex bank, was part of the federal government’s efforts to boost revenue collection in the non-oil sector following the oil price nosedive and reduction in related oil sector receipts.

Justice Dimgba, while delivering the judgment, recalled that the CBN participated in Suit No FHC/L/CS/126/2016 between Retail Supermarkets Nigeria Limited Vs Citi Bank Limited and CBN which challenged its circular with reference CBN/GEN/DMB/02/006 where CBN instructed banks to deduct the said N50 as stamp duty.

He maintained that the court, in that case, held that it was unlawful for the apex bank and the commercial banks to continue to make those deductions.

Nzeako, a Development Economist, told newsmen in a telephone chat, that although the Stamp Duty Act provides for stamp duty, the charge should be handled by the Nigeria Postal Agency (NIPOST) or the Federal Inland Revenue (FIRS)”, not the banks, said Nzeako.

“Even if the banks want to collect charges, it should be called something else and not stamp duty”, Nzeako argued.

“A stamp duty should come as a charge for affixing a stamp or something of that nature on a document.

“A situation where a bank collects stamp duty from customers for depositing money-making other transactions is wrong. So, to that extent, the court is right in declaring it illegal.”

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