FIRS targets N446b from Stamp Duties

The Federal Inland Revenue Service (FIRS) says it is ready and equipped to help the government deliver on its commitment to the people through improved tax revenue.

Tax payment remains the hardest civic responsibility for most citizens making tax collection challenging for agencies. At this period of economic turmoil triggered by COVID-19 pandemic, collection of taxes have also become more daunting. For instance, the Finance Act 2020 will cut government tax revenue by 60 per cent as businesses with less than N25 million annual turnover no longer pays Companies Income Tax (CIT).

The Finance Act 2020 came with many expectations and promises for economic revival through improved business activities and growth but it had its offside, there would be cuts on government’s tax revenue. The Finance Act is expected to slash 60 per cent tax revenue to the government as companies with less than N25 million annual turnover are not required to pay Companies Income Tax (CIT) based on the new law.

The plan is that as the companies grow bigger and expand their operations and turnover, they will be in a stronger position to pay higher taxes to the government. While the big break is awaited, government’s responsibility to the people through improved infrastructure and welfare must not suffer. These social amenities and development projects have to be funded through another tax plan- Stamp Duties. Government has already raised the Stamp Duties revenue target to FIRS from N17 billion to N446 billion, representing a 3000 percent increase.

The Executive Chairman of FIRS, Muhammad Nami said that government needs tax revenue to fulfill its commitment to the people He also said his long years of experience in the tax industry prepares him for the big tax ahead.

Nami assured that with 27 years of practice in the tax industry, the sector is not new terrain for him. “ Before I was appointed the Executive Chairman of the FIRS, I had practiced tax for 26 years. So, in the tax terrain, this should be my 27th year. This fact confirms what I have been engaged in since 1991 when I graduated from the University. I started tax practice in 1993, some few months after I completed my National Youth Service. This is the path God has carved for me. Little did I know that I would be talking to you today as the Executive Chairman of the FIRS,” he said.

On why the FIRS is charging Stamp Duties, Nami said they were due to the economic downturn occasioned by the COVID-19 pandemic. He quickly added that Stamp Duties are not new in Nigeria while also assuring Nigerians that paying Stamp Duty on tenancy agreement will not cause price increase in house rent.

The FIRS boss explained that Stamp Duties came into effect in Nigeria as a result of Ordinance 41 of 1939. Also, there have been several amendments to the Stamp Duties law over the years up to the Finance Act of 2019.

Nami said the most recent amendment recognised technology, e-commerce and cross border transactions in line with global best practices and current economic realities. Stamp Duty is a tax payable in respect of dutiable instruments as provided under the Stamp Duties Act, CAP S8, LFN 2004 (as amended).

“Such instruments include Agreements, Contracts, Receipts, Memorandum of Understanding (MOU), Promissory notes, Insurance policies and others stipulated in the Schedule to the Stamp Duties Act. It may interest you to know that the economic situation has increased the Government’s demand for funding,” he added.

He added that the new Stamp Duties Target occurred before the COVID-19 pandemic. “We collected as much as N18 billion in 2019. Presently, the Finance Act, 2019 has taken away 60 percent of our tax base. That is, 60 percent of the people who are supposed to pay Companies Income Tax will not do so. 60 percent of the people who are supposed to act as agents and pay Value Added Tax monthly will also not do so because their annual turnover is not more than N25 million. So, a large number of Small and Micro Enterprises in Nigeria today do not pay taxes. What this means is that these companies will no longer act as Agents for collecting VAT. The implication of this is that 60 percent of Nigerian Taxpayers will neither pay VAT nor CIT. Nigerians may note that the Federal Government is so mindful of the Taxpayers that the Finance Act, 2019 was passed long before the COVID-19 lockdown in Nigeria,” he stated.