KMO LEGAL NEWSLETTER – AUGUST 2020 (vol. 2)

CAN THE FEDERAL INLAND REVENUE SERVICE AMEND THE CONSTITUTION BY A MERE PUBLIC NOTICE?

By Felix Ayem (Associate)

INTRODUCTION

The procedure for constitutional amendment or any other Act in Nigeria is cumbersome and can only be made by the National Assembly in compliance with the provisions of section 9 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended). In this situation, no individual, ministries and agencies of government are empowered to embark on such duty as the role is constitutionally arrogated to the legislature in line with section 4 of the 1999 Constitution.

This article looks at the constitutionality of the information as contained in the Public Notice issued by the Federal Inland Revenue Service on the 20^th day of July 2020 wherein, the agency claimed to be exclusively in charge of stamp duties collected by banks in respect of all banking transactions.

THE PUBLIC NOTICE

The Public Notice entitled “Clarification on the Administration of Stamp Duties in Nigeria” was issued by the Federal Inland Revenue Service (FIRS) on 20^th July, 2020. Paragraph 5 of the Circular with the heading “Administration of Stamp Duties in Nigeria” is set out below for the purpose of emphasis.

“5. Administration of Stamp Duties in Nigeria.

1. Section 4(1) of the Stamp Duties Act provides that the Federal Inland Revenue Service shall be the only Competent Authority to impose, charge and collect duties upon instruments where such instruments relate to matters executed between a company and any person.
2. Section 4(2) of the Stamp Duties Act provides that the relevant authority of a state shall collect duties in respect of instruments executed between individuals.

iii. In respect of banking transactions, the FIRS is vested with the powers to collect stamp duties on all banking transactions. 

1. As such, the powers given to the State Government through their respective revenue authorities to administer stamp duties by ensuring the assessment, collection and accounting for stamp duties between individuals into the State Government revenue accounts does not include banking transactions.

v. The Stamp Duty Commissioner is appointed by the relevant tax authority (Federal or State) as prescribed by jurisdictional authority to administer the Act. The Function of the Commissioner is to administer the provisions of the Act and to supervise Stamp Duties office; adjudicating/assessment, stamping, the imposition of penalties where necessary, ensuring the security of stamped instruments, and account for duties collected”.

Download full Newsletter here FIRS and Stamp Duties 2 pdf..  as a pdf document.