Written by Gboyega Akinsanmi
Experts in tax administration and law have censured the claim of the Nigerian Postal Service (NIPOST) to the administration of Stamp Duties Act, noting that NIPOST’s involvement in stamp duties started as a historical error.
Consequently, the experts cited provisions of the Stamp Duties Act, 2004; the Finance Act, 2019 and the FIRS (Establishment) Act, 2007 that empowered the Federal Inland Revenue Service (FIRS) to administer and collect stamp duties charges on behalf of the Federal Republic of Nigeria.
In separate interviews yesterday, an erstwhile Registrar/Chief Executive, Chartered Institute of Taxation of Nigeria (CITN),
Prof. Taofeeq Abdulrazaq; Fiscal Policy Partner & West Africa Tax Leader, PricewaterhouseCoopers (PwC), Mr. Taiwo Oyedele and a Senior Legal Officer, Africa Program of the Open Society Justice Initiative (OSJI), Dr. Chidi Odinkalu clarified issues around the collection of stamp duty in Nigeria.
While Abdulrazaq and Oyedele argued that there was no basis for conflict between FIRS and NIPOST considering the provisions of the extant laws, Odinkalu claimed that the heads of the agencies “are not fighting because of national interest, but because of 4% retention cost they would claim after collection.”
In a series of tweets Tuesday, the Chairman, NIPOST Board, Ms. Maimuna Abubakar protested the claim of FIRS as the designated authority for the administration of stamp duties, accusing the FIRS of stealing the mandate of NIPOST.
Under the extant laws, Abubakar claimed that the adhesive postage stamp “is not only used for postage. It is the only stamp with which denoting of all receipts documents and registrable instruments is to be done in Nigeria.
“The tax certificate or a tax clearance certificate and any other formalized document issued by the FIRS whether in the form of a paper copy or an electronic copy which is printed out remains a document liable to be denoted with an adhesive postage stamp minted by NIPOST.
“The Finance Act 2019 did not delete nor repeal section 5(d) nor Section 34(1) and (2) of the NIPOST Act 2004; neither did it amend the sections” NIPOST’s board chairman had claimed in her series of tweets.
In a swift response on Wednesday, however, the FIRS faulted the position of the NIPOST Board on the ground that the power “to collect stamp duties resides with it and not NIPOST” citing the Finance Act 2019 and Stamp Duties Act 2004.
Amid these disagreements, Nigeria’s leading tax experts explained the mandates of FIRS and NIPOST with respect to the administration of stamp duty charges, citing provisions of of Stamp Duties Act, 2004; Finance Act, 2019 and FIRS (Establishment) Act, 2007 to substantiate their standpoints.
Abdulrazaq, a Professor of Taxation, Faculty of Law, Lagos State University (LASU), explained that the friction between FIRS and NIPOST “is about who has the right to collect stamp duties under section 4(1) of the Stamp Duties Act, 2004 as amended by the Finance Act, 2019.”
He noted that stamp duties “are payable for instruments executed between an individual and a corporate body, particularly the stamp duty on electronic receipts occasioned by money transfers through the banks.”
Consistent with these provisions, Abdulrazaq pointed out that the FIRS “has the power to collect and administer stamp duty charges,” which according to him, fall under section 4(1) of the Stamp Duties Act, 2004.
Alongside the mandate of FIRS, CITN’s former registrar clarified that various State Internal Revenue Services nationwide “are equally empowered under section 4(2) of the Stamp Duties Act, 2004 to collect stamp duties on instruments or transactions between individuals.”
Abdulrazaq, therefore, pointed out that the incursion of NIPOST into stamp duties started as a historical error in which for many years the word stamp in the Stamp Duties Act was literally taken to mean postage stamps only.
“The historical error still persists till today as many persons and establishments still affix postage stamps to various documents,” Abdulrazaq said, dismissing the claim of NIPOST that its mandate had been usurped.
Under section 2 of the Stamp Duty Act, however, the professor provides semantic perspective to the dispute between FIRS and NIPOST, claiming that it “is clearly stated that stamp means a stamp impressed by means of a die as an adhesive stamp for denoting any duty or fee.
“NIPOST does NOT collect stamp duties but sells postage stamps. Section 5 of the Stamp Duty Act provides for the manner of denoting duty and this is extended to include adhesive stamps, impressed stamps and revenue stamps. There is no word like adhesive postage stamps in the Act.”
More incisively, Abdulrazaq noted that section 5 of the Stamp Duty Act provided that postage stamps might be used, but section 115 of the Act made provision for regulations “to be made by the president and the governor of a state for its substitution by various other types of stamps.
“The issue is really about the taxpayers and that should be the focus. There is no doubt that stamp duty is a tax on documents. A tax is collected by the relevant tax authority. There should be no confusion about this,” he clarified.
Historically, however, Oyedele agreed that NIPOST had been the agency of the federal government producing adhesive stamps, which according to him, was used for most fixed stamp duty payments.
For this purpose, the tax expert disclosed that NIPOST earned a percentage as cost of collection, noting that the retention cost “is the main reason NIPOST is trying to fight the takeover of the role by the FIRS.”
Legally, Oyedele clarified that there “is no conflict. The function of NIPOST in its enabling law does not include administration of stamp duties. It is the Stamp Duties Act that says postage stamps may be used as adhesive stamps.”
However, according to PwC’s fiscal policy partner, the Finance Act 2019 amended the Stamp Duties Act and stated specifically that FIRS is now the only competent federal authority to collect stamp duties.
Based on the Stamp Duties Act, he said FIRS “is the only competent authority to collect stamp duties payable to the federal government while the state tax authority is the competent authority regarding stamp duties payable to the state. I don’t think there is a conflict since the law does not say both NIPOST and FIRS can collect stamp duties.”
Oyedele, therefore, emphasised the need “to manage the transition of the limited stamp duty role previously played by NIPOST to FIRS. I think both agencies should come together and iron out the issues rather than taking their disagreements into the public space.”
Specifically, the tax expert challenged the NIPOST to concentrate more on how to be better at rendering postal services and reinvent itself to compete with the private sector players in the postal service sector. Under the new legal regime, according to him, FIRS their percentage is 4 percent.
Unlike Abdulrazaq and Oyedele, Odinkalu expressed concerns about the manner the helmsmen of the two federal agencies conducted themselves in the public space over the conflicting mandates under the regimes that established them.
He noted that the heads of FIRS and NIPOST “are not fighting in the interest of Nigerians. If they truly have the interest of the country at heart, there will not have been any reason for them to bring their disagreement to the public.”
Odinkalu, a former Chairman, Board of Governors, National Human Rights Commission (NHRC), therefore, observed that these people “are actually fighting because of the 4% cost of collection their agencies would retain.”