By Zhihwi Dauda Esq.
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1.1 ABSTRACT
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Stamp Duties can be defined as a tax imposed on commercial and
legal instruments i.e. dutiable instruments at the rate specified
in the schedule to the Act either physical or electronic, which
records and gives effect to certain transactions and makes such
instruments admissible as evidence in any Court of Law in
Nigeria.[i] Stamp duties Act is
administered by the Federal Inland Revenue Service (FIRS).[ii] Recently the Federal
Government through the office of Attorney-General (A-G) of the
Federation has moved to recover a backlog of unremitted revenues
accruing to it through the Stamp Duties in the last five
years (between 1st January 2016 to 30th June 2020)
which has been neglected for more than 20 years.[iii][1]
After the inauguration of the Inter-Ministerial Committee (IMC) for
Audit and back-year Stamp Duties recovery[iv] on 30th June 2020,
many have asked questions as to the role and the jurisdiction of
the A-G of the Federation to delve into the issue of Stamp duties
generally and particularly in respect to back-years Stamp duties
recovery in the light of the provisions of Section 2,
8(1)(b)&(c), 25 and 68 of the Federal Inland Revenue Service
(Establishment Act) and this has put a burden on the
writer to come up with this research article. It is the aim
of this research to identify the statutory role of the office of
A-G of the Federation particularly in the process of recovery of
back-year Stamp Duties under the Stamp Duties Act (SDA)[v]. The research shows that the
A-G of the Federation is statutorily empowered in his name to
recover back-years of all stamp duties, penalties, interest, debt
owed to the Federal Government in a summary manner under
the SDA. However, there is the challenge of lack of
expertise in the field of taxation by officers who administer the
recovery and some judges of the Federal High Court (FHC) before
whom the recovery process will be presented or adjudicated upon.
There is also conflict of law in some provisions of SDA as it
relates to the provisions of Federal Inland Revenue Service
(Establishment Act 2007 (FIRSEA) etc. the work recommended
therefore that SDA should further be amended by the next Proposed
Finance Bill 2021 for effective administration, and also Judges of
Federal High Court should be trained on the general principle of
taxation in Nigeria for effective adjudication on tax matters. In
conclusion; the administration of Stamp duties and particularly the
recovery of back-year stamp duties if effectively harnessed will
serve as a tool for an increase in tax revenue generated by the
Federal Government.
2.1 INTRODUCTION
Stamp duties is an indirect tax imposed on all
dutiable instruments (i.e. legal or commercial
instruments listed under the schedule to the Stamp Duties Act as
being subject to stamp duties charges) requiring such
instruments to be stamped or denoted either physically or by
electronic means by the relevant Stamp Duties Commissioner upon
payment of the relevant fees prescribed under the stamp duties Act
paid by a person who is liable to pay the duties (mostly
the person who will naturally benefit under the instrument if
stamped).
Historically, Stamp Duties was first introduced in
Venice in the year 1604 and other European
Countries welcomed the idea; Spain in 1610,
Netherland in 1620, France in
1651, Denmark in 1657 and England
in 1694. After 299 years of the introduction of
Stamp Duties in the world (1604 to 1903), Sir
Fredrick Lugard (the then High Commissioner of the Northern
Protectorate) introduced the first Stamp Duties Ordinance
of 1903 which was later amended by Ordinance of 1923, 1928
and 1931. It is however worthy of note, the first holistic
Stamp Duties law enacted in Nigeria was the Stamp Duties
Ordinance of No.5 of 1935 (SDO). After independence; under
the 1963 Constitution of FRN, the said SDO was deemed as an Act of
the National assembly which was further amended in 1964 where
the following sections were inserted S.100, 102, 111, 112 and
114 etc and under Section 315 of the 1999 Constitution of
FRN SDO was further deemed as the act of National
Assembly under the constitution, hence the Act is
regarded as the Stamp Duties Act Cap S8 LFN 2004
(SDA), recently the SDA was amended by S.
52-56 of Finance Act 2019 which amended the following
Sections of SDA 2, 4,89, 90 and schedule of the Stamp Studies
Act.
On 30th June, 2020, the Secretary to the Government
of the Federation (SGF), Mr. Boss Mustapha, acting
on the directive of the President Muhammadu Buhari
(GCON), inaugurated the Inter-Ministerial Committee on Audit and
Recovery of Back Years Stamp Duties where he said thus:
“Stamp duty would be second to oil in revenue
generation.”[i]
The Global effect of Covid-19 on the world economy and the fall in
international price of crude oil which is the major source of
revenue to the Nigerian government has compelled the government to
look for an alternative source of funding to carry out its
expenditure; a source that is found in Stamp Duty taxes.[ii] The Attorney General in the
exercise of his power under Section 111 of Stamp duties
Act is to supervise and control fully the recovery of the
back-years stamp duties owed to the government and this is the
first of its kind in about 94 years since the
inception of Stamp duties Act in Nigeria. Similarly, the Federal
Inland Revenue Service under the leadership of
the Executive Chairman of the FIRS Mr. Muhammad
Nami a seasoned tax consultant and administrator has
revitalized and reinvigorated the machinery of effective
administration of stamp duties in Nigeria which has already began
to yield positive and encouraging result. As at April ending, 2020,
the balance in the Stamp duties collection account with CBN had
grown from =N=30 billion to =N=58 billion and =N=66 Billion by the
end of May, 2020[iii][2] this feat was
achieved largely as a result of the deployment of a new Application
Programming Interface (API) technology solution by the FIRS, which
is an – online real-time technology that makes the collection of
Stamp Duties much easier.
3.1 CONCEPTUAL CLARIFICATIONS OF TERMS
3.1.1 Stamp duties Audit: in the context of this
research means; the process in which the Tax Authority (FIRS)
officially examine, verify and analyze all dutiable instruments in
the possession of any duty payer where the liability to pay or the
obligation to ensure duty is paid; is on such duty payer in line
with the provisions of the Stamp Duties Act
3.1.2 Back-year Stamp Duties: this refers to
duties that ought to be paid under the Stamp Duties Act on
instruments executed in the preceding years (up to five (5) years)
for example in the year 2020, the back-years stamp duties will
include duties not paid in any of these years between (2015 to
2019)
3.1.3 Recovery: Means the act or process of
getting back or retrieval by the statutory office (either full or
partial) of Stamp Duties liabilities from the duty payer which
ought to have been paid on a dutiable instrument to the relevant
Tax Authority (FIRS)
3.1.4 Duty: Means any Stamp Duty fee for the
time being chargeable on any dutiable instrument before stamping
same under SDA.
3.1.5 Fines: Means sanction imposed in monetary
form for failure to pay duties on dutiable instruments or do an act
as required under the SDA
3.1.6 Debt: Means any money owed to Government
of the Federation under the SDA which may include but not limited
to ( duties not paid, fines, penalty or interest imposed and
judgment debt awarded in favor of Government etc)
3.1.7 Dutiable Instruments: Means all legal and
commercial instrument or document classified under the Stamp Duties
Act as subject to stamping upon payment of duty.
3.1.8 Compoundment of offense: Means the
process by which the tax offender or defendant in tax criminal
prosecution applies to the appropriate office for his/her tax
offence to be settled upon payment by him/her of all the Stamp
Duties liabilities, penalties, fines and interest that follows in
order to withdraw the criminal charge against him.
4.1 LEGAL FRAMEWORK FOR THE AUDIT AND RECOVERY OF
BACK-YEAR STAMP DUTIES BY THE ATTORNEY GENERAL OF THE
FEDERATION.
The basis upon which the back-years Stamp Duties (debt,
penalties and interest) can be recovered for the government in the
name of the Attorney General of the Federation are as follows:
- Section 111 SDA empowered the G of the
Federation (in his name) to recover all duties, penalties,
interest, debt owed to the government in a summary manner. Equally,
Section 174 of the 1999 Constitution of the FRN
which empowered the A-G Federation to
institute and undertake any criminal proceedings against any person
before any Court of law in Nigeria in respect of any offence
created by or under any Act of National Assembly (including
offences as it relates to recovery of back years stamp duties under
Stamp Duties Act). In the same line, Administration of
Criminal Justice Act (ACJA) 2015 will be used by the
office of the A-G of the Federation where his office decides to
prosecute the tax offenders who failed to respond to his demand
notice issued by the office of A-G Federation for the payment of
back-years stamp duties after audit and duties liability have been
established. - Section 114 SDA permits the A-G of the
Federation to go as far back as 5years (preceding years) in
recovery of duties, penalties, interest, debt owed to government
under the Stamp Duties Act. While Section 110 SDA
empowers the A-G of the Federation to include any current fine,
penalties or duties liability in the process of back-years duties
recovery under the SDA. - 32 of the FIRSEA 2007 provides for interest of
10% of the amount of tax payable to be charged on any taxes not
paid (including Stamp Duties) within one month after issuance of
Demand notice. - Federal High Court Civil Procedure Rule of
2019 provided for un-defended list procedure for summary
recovery of debt owed to the Government, if the office of the A-G
of the Federation decides to adopt this recovery by civil matter.
And 83 Sheriffs and Civil Processes Act,
Cap S6 LFN Revised Edition 2010) makes provision for how
an order of Court to be obtained in cases of recovery of stamp
duties debt owed to the Government under the un-defended list
procedure of the FHC can be enforced.
5.1 THE OFFICE OF ATTORNEY GENERAL (AG) OF THE
FEDERATION AND MINISTER OF JUSTICE UNDER THE 1999
CONSTITUTION.
5.1.1 HISTORIOCAL EVOLUTION OF THE OFFICE OF A-G
FEDERATION:
Under the English Legal System, the concept of an Attorney General
of a Country dates back to the Anglo-Norman system of government.
During this time, French legal terms were introduced into the
English system of government. The first mention of the term
“Attornus Regis,” or “King’s
Attorney,” was made in 1253. In the year
1472, the first formal appointment was made in
England. The office of the Attorney-General has always been of
great importance; the Attorney-General was both a Legal
Representative of the king and Royal Government as well as the
“parens patriae,” or “guardian of public
interests.” As such, the Attorney-General was charged with
protecting the rights of both the crown and the public . Therefore
Her Majesty’s Attorney General for England and
Wales is one of the Law Officers of the Crown.
The Office of Attorney-General came into being in Nigeria as
part of the received English Law under the Statutes of General
Application (SOGA) which provide to the extent that all laws
enforced in England as at 1st January 1900 (excluding Common Law
and Equity) is deemed to be part of the Nigeria Legal System.
However, before the Independence the A-G of the crown performs the
responsibility of this office from England. After the independence
in 1960, the 1960, 1963 and 1999 Constitution of the
FRN provided for the office of Attorney-General of the
Federation in Nigeria and since 1960 to 2020,
Nigeria had 23 numbers of Attorney-General Federation beginning
from the first A-G Federation Hon. Justice Teslim Elias
(CFR, GCON 1960-1966) to the present A-G of the
Federation Mr. Abubakar Malami (SAN) who was appointed on 11th
November, 2015
5.1.2 THE OFFICE OF THE A.G OF THE FEDERATION
(OAGF): The office of A-G of the Federation is by
political appointment made by the President; the occupant of such
office equally serves as the Minister of Justice. The office is
provided for under 150(1) 1999 Constitution of the
FRN as the Chief Law Officer of the Federation and the
Minister of Justice. The section provide thus:
“There shall be an Attorney-General of the
Federation who shall be the Chief Law Officer of the Federation and
a Minister of the Government of the Federation”
The Attorney-General as the Chief Law Officer of the Federation
can exercise his power and performs his functions either personally
or through any Law officer in the Federal Government Ministries,
Department or Agency (MDAs).
The duties of Attorney-General of the Federation are enormous
apart from those duties expressly provided for under the
constitution. For instance under S.174 of the 1999
Constitution, the A-G of the Federation is
constitutionally empowered to institute and undertake any criminal
proceedings against any person before any Court of law in Nigeria
in respect of any offence created by or under any Act of National
Assembly. The office of A-G of the Federation is responsible for
but not limited to thefollowing duties:
- Ensuring accessibility to justice for all persons in
Nigeria. - Providing Legal Advice to Federal Government on its treaties
obligation, facilitating the transaction of government polices into
legislation through the drafting of Executive Bills in accordance
with directives from the President or Federal Executive Council
(FEC) for Laws to be enacted by the National Assembly. - Providing legal advice to the Federal Government Ministries,
Statutory bodies, and Departments and Agencies of the Federal
Government; Preparing subsidiary legislation for Federal government
and MDAs; and vetting contract agreements on behalf of Federal
Government and its MDAs. - Prosecute criminal matters on behalf of the Federal Government
through law officers in his office; Defending the Federal
Government, Ministries, Statutory bodies, Departments and Agencies
of Federal Government in all Civil matters instituted against them
where the Act establishing such MDAs did not provide for their in
house law officers to prosecute and defend civil cases on behalf of
their institution. - Attending the Federal Executive Council meeting where policies
are formulated for the Federal Government; - Performing other duties assigned to his office by the defferent
Act of National Assembly such as Section 111 of Stamp
Duties Act on the recovery of Stamp Duties debt owed to
the government. - He is equally appointed a statutory member of Board of many
Federal Government MDAs such as FIRS etc.
6.1 ROLE OF THE A-G OF THE FEDERATION IN THE RECOVERY OF
BACK-YEARS DUTIES UNDER THE STAMP DUTIES ACT.
The involvement of the Office of Attorney-General of the
Federation in the recovery of back-years Stamp Duties is centered
on the provision of Section 111 of the Stamp Duties
Act which provide thus:
“All duties, fines and debt due to the Government of
the Federation imposed by this Act shall be recoverable in summary
manner in the name of the Attorney-General of the Federation or of
the State.”
It is evidently clear by the above Section that, once it is
established that duties, liabilities, fines or debt is owed to
Federal Government under any provision of the Stamp Duties Act, the
A-G Federation is statutorily empowered to summarily recover same
from any person or body of persons liable to pay such debt, duties
and or interest owed to Federal Government.
The National Assembly in their wisdom have put a limit to how
far the A-G Federation can go in back-years stamp duties recovery
of such debt, duties and interest owed to the Federal Government.
Section 114 of the Stamp Duties Act provides
thus:
“All proceedings for recovery of any duties, fines,
penalty and debt due to the Government of the Federation imposed by
this Act, MAY be commenced or prosecuted at
any time within five years after the offence committed by reason
whereof such duty, fine, penalty or debt shall be
incurred”
Interestingly, if one applies the literal rule
of interpretation of legislation in respect of S.111 &
S.114 of SDA provided above, one will naturally come up
with the following observations.
- The A-G Federation is unequivocally empowered to recover all
duties, fines, penalty and debt due to the Government of the
Federation under SDA. - The Recovery to be made by the A-G Federation is limited to
only 5 preceding years and no more. - What is to be recovered by the A-G Federation is not only
duties, fines, penalty and debt but includes interest on such
duties, fines and penalties not paid. The word
“debt” used in the Section in my opinion includes
“interest” owed to the government on duties (tax)
not paid on the rate as provided by Section 32 of FIRSEA
2007. - The A-G of the Federation in recovery of all duties, fines,
penalty and debt due to the Government of the Federation under SDA
MAY prosecute some tax offenders who
failed or neglected to pay their duties liabilities established
after the Demand Letters was served on them by the Office of the
A-G of the Federation. The use of the word “May”
in Section 114 SDA signify elective and not
mandatory, meaning if the office of A-G of the Federation so
desires; he may prosecute the tax offender using criminal
prosecution; more so that such power is constitutionally provided
for under Section 174 of the 1999 Constitution of
FRN which empowered the A-G Federation to institute and
undertake any criminal proceedings against any person before any
court of law in Nigeria. This is in respect of any offence
created by or under any Act of the National Assembly (including
offences as it relates to the recovery of back years duties under
SDA) of the A-G Federation if he so desires may use civil procedure
to recover such debt owed to the government.
Section 110 SDA stipulates to the extent that
the A-G of the Federation can include any current fine, penalty or
duties liability in the process of back years duties recovery under
the SDA. For the avoidance of doubt the S. 110 SDA
provide thus: “Proceedings for the recovery of any duty
imposed by this Act or for the recovery of any debt due to the
Government of the Federation under this Act may be included in any
proceedings for the recovery of a fine or penalty under this
Act”
7.1 THE POWER OF THE PRESIDENT IN COMPOUNDMENT OF
OFFENSES UNDER SDA: The Office of Attorney General of the
Federation in exercise of his power under 111 of
SDA either through the Law Officers in his office or
through a Recovery Agent appointed by the A.G Federation, Once the
A.G or the Agent so appointed has conducted an audit, established
and declared the Stamp Duties liabilities of a duty payer on a
dutiable instruments, such stamp duties liability declared cannot
be reduced or mitigated by anybody, or any office including the
Office of Attorney-General of Federation except the President or
the Governor as the case may be. For avoidance of doubt,
Section 112 SDA provides thus;
“The amount to which any person is declared to be liable
in respect of any fine or penalty and the amount due as a debt to
the Government of the Federation under this Act shall not, except
as hereinafter provided, be subject to any
mitigation.”
Section 113 SDA provide thus:
“The President or governor
as the case may be, may in his discretion MITIGATE any fine or penalty or debt due to the
government of the Federation under this Act or STAY or COMPOUND any
proceedings for recovery thereof and may also after judgment
further mitigate or remit any such fine, penalty or
debt”
In essence, under the process of recovery of back-years Stamp
Duties owed to the Federal Government by the A-G
Federation, the President has the power to mitigate, reduce Stamp
Duties liability for any tax offender under the SDA.
It is worthy of note that, any tax offender under the SDA who is
charged to Court by the A.G Federation in prosecution of an offence
committed by such person under the SDA; can apply to the President
through the Office of the A-G of the Federation for the
Conpoundment of Offense the charged. The President under
S.113 of SDA has the power to compound the offense
and request such offender to pay certain amount of money upon which
the criminal prosecution will be discontinued accordingly. An
application for compoundment can be made to the President during
the pendency of criminal proceeding before Court in respect of
recovery of back years duties, and the decision of the President on
such application will be communicated to the applicant and to the
Court through any officer of the Law from the office of the
Attorney General of the Federation.
8.1 CHALLENGES AND LIMITATIONS.
There are many limitations that can pose a challenge to the
effective and smooth implementation of the back-year Stamp Duties
recovery by the A-G Federation under the SDA, this includes but not
limited to the following:
- Some of the sanctions provided as penalty and fines for non
compliance with the provision of the Stamp duties Act which is
equally not covered by the Federal Inland Revenue Service
Establishment Act 2007 are ridiculously low and has defected the
purpose of sanction as deterrence mechanism. - Despite the provision of Section 24(f) of the 1999
Constitution of FRN which put an obligation on all citizen
to pay their taxes promptly to the government, many of the duty
payers may not be patriotic enough to comply with Demand Letter
issued by the A-G of the Federation in the process of Back year
Stamp Duties recovery and such person or body of person may result
to litigation which will invariably pose a challenge in the
process. - Though Section 111 of SDA empowers the A-G of
the Federation to recover in a summary manner all debt, duty and
penalty owe to the Government under SDA. The SDA did not further
define the special procedure for Court to adopt which the
legislature had in mind when they inserted the word
“recoverable in summary manner” in the
section. - The back year stamp duties recovery process in many cases
particularly in respect of Private sector duty payers; may end up
in Federal High Court (FHC) for enforcement. And the reality is
that, Honorable Justices of the FHC though are very versatile on
general aspect of Federal laws; but may be lacking in knowledge and
experience in the field of taxation and Stamp Duties Administration
specifically.
i, The provision for compoundment of offence
under Section 113 of SDA which empowered the
President to compound offences under the Stamp
Duties Act is in conflict with S.48 of FIRSEA
which empowered the Service to compound offence
under the FIRSEA; the challenge is that, some of these offences
under both Acts are similar. But worthy of note is that
Section 68 of FIRSEA provide for the supremacy of
Federal Inland Revenue Service (Establishment) Act 2007 over all
other Federal Tax laws including the Stamp Duties Act which is
Item 6 of the 1st schedule to the
FIRSEA.
ii, Sections 111 & 110 of SDA as provided above
is in conflict with Sections 2, 8(1)(b)(c), 25 & 47 of
FIRSEA as regard to the recovery of current year
Stamp Duties by A-G Federation. For instance, the year
2021 is the current year of stamp duties collection, if the A-G
Federation decides to extent back year stamp Duties recovery to
include 2021 under S.110 of SDA; this will encroach or impinge into
the jurisdiction of the FIRS on the administration of stamp duties
in Nigeria which include assessment of current year duties,
collection and accounting of same in accordance to Federal Inland
Revenue (Establishment) Act 2007
iii, Section 111 of SDA which empowered the A-G
Federation to recover back-years duties did not provide the manner
or procedure in which such tax revenue recovered from unpaid duties
will be accounted for. This in my opinion may pose a challenge as
to where the money will be paid to and who is
accountable for it under the law?. Taking into
cognizance that Section 2 of FIRSEA empowers the
Service to collect all Federal Taxes including Stamp duties and
to account for it. While Section
8(1)(b)&(c) of FIRSEA further provides that:
“The Service (FIRS) shall
(b)Assess, collect, account and
enforce payment of taxes as may be due to Government or any
of its agencies.
(c)Collect, recover and pay to the
designated account any tax under any provision of this act
or any other enactment or law.” (Stamp Duties Act
is item 6; one of the Federal Tax listed under the 1st
Schedule to FIRSEA)
The literal interpretation of the above means: all duties
collected or recovered under any provision of the SDA based on the
supremacy of FIRSEA by virtue of Section 68 of the
FIRSEA such Tax revenue shall be accounted for in
accordance to Section 8(1)( c) of the FIRSEA by
the Chief accounting officer of the FIRS as provided under
Section 11(b) of FIRSEA.
6. Challenges that may be faced in the process of recovery of
back year Stamp Duties from Ministries, Departments and Agencies
(MDA’s) of Government under Section 111 of
SDA is that, many MDAs may not have the fund readily at
hand to pay duties owed to Government when Demand Notice is served
on them. However Section 24 of FIRSEA has
empowered the Accountant General of the Federation to deduct at
source from the budgetary allocation, un-remitted taxes due from
MDAs and shall not later than 30days
thereafter transfer such deduction to the Service
(FIRS). The conflict that may arise here is that,
even though Section 111 SDA empowers the A-G
Federation to recover duties, penalty and debt owed to the Federal
Government, where the Accountant-General of the Federation is
called upon to deduct from the source in the process of recovery of
such duties not paid by MDAs, the Account General of the Federation
must as a matter of law based on Section 24 & 68 of
FIRSEA transfer all the deduction made to the CBN
dedicated revenue account open for FIRS collection within 30days
after and not to the A-G Federation under whose name the recovery
is made.
9.1 RECOMMENDATIONS:
Having carefully studied the likely challenges the implementation
of the recovery of back-years Stamp Duties under the SDA may face,
I make the following recommendations as a way forward.
1. There is the need for FIRS to make use of the opportunities
available to it in the ongoing process of drafting the proposed
Finance bill 2021 which may be submitted by the President to
National Assembly together with 2022 Budget as was done in the
preceding year of 2020. FIRS should make recommendations for the
amendment of the SDA amongst others on the following suggested
critical areas:
a. There is a need to review upward; penalty
and fines for some offences under Sections 11 (3),
S.13(1)&(2), 23(1) S.25 and S.27(2) S.32(1), S.42(2) &
S.87 of the Stamp Duties Act which are ridiculously low
and are not intendment with the current economic realities of
Nigeria.
b. This Section 111,110 & 113
SDA was introduced in 1964 Stamp Duties Act Amendment when
the then Federal Board of Inland Revenue (FBIR) and the current
FIRS was not yet established and when the statutory duty to collect
stamp duties was on the Federal government under Section
4(1) of SDA before the amendment by S.53 of Finance Act
2019. There is therefore a need to amend such sections to bring it
in conformity with the provision of FIRSEA 2007 No. 13 in line with
S.68 of FIRSEA.
c. A special summary Procedure for recovery of
stamp duties, penalty and fine owed to the Government under the SDA
should be prescribed or inserted by the National assembly in the
proposed Finance Act to guide the Court.
d. The mandatory requirements for all Federal
Ministries, Departments and Agencies of government and Financial
Institutions to key into the Stamp duties collection automation
system should be inserted into the SDA via the proposed Finance Act
2020.(So that for instance 1% duties on all contract agreement will
be deducted at source by the MDAs and be paid on behalf of the
contractor from the first payment of such contract sum)
e. The Schedules to SDA should be amended and
reorganized into three (3) schedules namely: 1st
schedule for all Ad-valorem dutiable instruments,
2nd Schedule for Fixed dutiable instrument and
3rd Schedule for other general matters under SDA.
This is for precision and simplicity of the Act.
f. The rights of duty payers in the process of
recovery of debt, duties and penalty owed to the government of the
Federation in the name of the Attorney-General of the Federation as
it is currently constituted should be well spelt out in the SDA to
avoid tax disputes.
2. The Ministry of Finance through the Presidency should
recommend that the National Assembly by resolution of the both
houses under Section 116 of SDA increase duties
payable on certain instruments that are ridiculously low,
particularly the fixed duties instrument with exclusion of money
deposit receipts (whether physical or electronically.)
3. The A-G of Federation should request the Chief Judge of the
Federal High Court to designate Judges in each of the six (6)
geopolitical zones in Nigeria that will handle tax matters majorly
in addition to other matters that may be assigned to such judge in
order to promote speedy conclusion of tax cases pending when a
Federal Tax Court is established.
4. The Federal Ministry of Justice (FMOJ), National Judicial
Council (NJC), Federal Ministry of Finance (FMOF) through it Agency
FIRS by extension should organize a continues holistic training of
some selected judges of the Federal High Court on tax practice and
procedures in Nigeria as this will enhance their skills in speedy
adjudication of tax matter brought before them.
10.1 CONCLUSION:
Government needs tax revenue to effectively implement its yearly
budgets, and if citizens by extension corporate bodies or
institutions don’t pay tax or don’t pay the right tax at the time
stipulated by law; it will affect tax revenue generation. Hence the
effective recovery of back-years Stamp duties by the Office of
Attorney General of the Federation as it is presently constituted
under the Stamp Duties Act will serve as a tool for an increase in
tax revenue generation. There is need for cooperation and
partnership between the Federal Ministries, Departments and
Agencies of government for the smooth administration of Stamp
Duties in Nigeria. For instance, if 1% of all contract sums awarded
by both Federal and State Government to corporate organizations for
execution in respect of capital budget of the Federal Government
(including Federal Ministries, Departments and Agencies of
Government) and State government (including State MDAs) are paid
and remitted to government as tax revenue every year, it will boost
the annual revenue generation of the government.
- CONCLUSION:
Government needs tax revenue to effectively implement its yearly
budgets, and if citizens by extension corporate bodies or
institutions don’t pay tax or don’t pay the right tax at the time
stipulated by law; it will affect tax revenue generation. Hence the
effective recovery of back-years Stamp duties by the Office of
Attorney General of the Federation as it is presently constituted
under the Stamp Duties Act will serve as a tool for an increase in
tax revenue generation. There is need for cooperation and
partnership between the Federal Ministries, Departments and
Agencies of government for the smooth administration of Stamp
Duties in Nigeria. For instance, if 1% of all contract sums awarded
by both Federal and State Government to corporate organizations for
execution in respect of capital budget of the Federal Government
(including Federal Ministries, Departments and Agencies of
Government) and State government (including State MDAs) are paid
and remitted to government as tax revenue every year, it will boost
the annual revenue generation of the government.
Written By Zhihwi Dauda Esq. (LL.B, B.L, LLM,
ACIT), E-mail: daudathihwi@gmail.com[3] Phone:
08059538671
[1] Z. Dauda
“An Over View of the Stamp Duties Administration in Nigeria”
an-overview-of-the-stamp-duties-administration-in-nigeria-with-the-finance-act-2019-amendment/[4]
accessed on 18/8/2020.
[2] S. 58 Finance Act 2019,S.
2 and 25 of FIRSEA and Item 6 of 1st Schedule to FIRSEA
2007
[3] https://dailypost.ng/2020/07/01/nigerian-govt-moves-to-recover-6-year-stamp-duty-backlog/[5] accessed on
18/8/2020.
[4] The Inter-Ministerial
Committee (IMC) for Audit and back-year Stamp Duties recovery
was inauguration of the by Mr Boss Mustapha Secretary
to the Government of the Federation (SGF)
[5] Stamp Duties
Act Cap S8 LFN (2004) Revised Edition
Volume 13 LFN 2010
[6] Vanguard news paper on line
https://www.vanguardngr.com/2020/06/fg-moves-to-recover-unremitted-5-year-stamp-duty/
(Accessed on 23 of August,2020)
[7] Vanguard news paper online
https://www.vanguardngr.com/2020/07/firs-muhammad-nami-to-deliver-keynote-address-on-stamp-duty-webinar/
Accessed on 26th July, 2020.
[8] Ibid Foot Note no.1
[9] https://www.vanguardngr.com/2020/08/firs-generates-n3bn-from-stamp-duty-weekly-%E2%80%95-nami/[6] Accessed on
26th July, 2020.
[10] Sarah Winkler[7] “History of an Attorney
General” https://people.howstuffworks.com/government/local-politics/attorney-general.htm[8]
Accessed on 28th August, 2020
[11] The Attorney General
serves as the chief legal adviser to the Crown and the Government
in England and Wales. In 1673 the Attorney
General officially became the Crown’s adviser and representative in
legal matters, although still specializing in litigation rather
than advice. Wikipedia “A-G for England and Wales https://en.wikipedia.org/wiki/Attorney_General_for_England_and_Wales[9]. Accessed on
28th August, 2020
[12] Godwin
Iheabunike, Esq. (Deputy Director FMOJ) & Legal
Adviser PTAD. In his paper “Powers and Duties of the
Attorney-General of the Federation” being presentation made
during the in house training program organized by the Department of
Human Resources of the Federal Ministry of Justice for the
promotion examination candidates.
[13] https://www.justice.gov.ng/index.php/the-ministry/history/past-attorney-generals-of-the-federation[10]. Accessed on 28th of
August, 2020.
By Zhihwi Dauda Esq.
1.1 ABSTRACT
Stamp Duties can be defined as a tax imposed on commercial and
legal instruments i.e. dutiable instruments at the rate specified
in the schedule to the Act either physical or electronic, which
records and gives effect to certain transactions and makes such
instruments admissible as evidence in any Court of Law in
Nigeria.[i] Stamp duties
Act is administered by the Federal Inland Revenue Service
(FIRS).[ii] Recently the
Federal Government through the office of Attorney-General (A-G) of
the Federation has moved to recover a backlog of unremitted
revenues accruing to it through the Stamp Duties in the last five
years (between 1st January 2016 to 30th June 2020)
which has been neglected for more than 20 years.[iii][1]
After the inauguration of the Inter-Ministerial Committee (IMC) for
Audit and back-year Stamp Duties recovery[iv] on 30th June 2020,
many have asked questions as to the role and the jurisdiction of
the A-G of the Federation to delve into the issue of Stamp duties
generally and particularly in respect to back-years Stamp duties
recovery in the light of the provisions of Section 2,
8(1)(b)&(c), 25 and 68 of the Federal Inland Revenue Service
(Establishment Act) and this has put a burden on the
writer to come up with this research article. It is the aim
of this research to identify the statutory role of the office of
A-G of the Federation particularly in the process of recovery of
back-year Stamp Duties under the Stamp Duties Act (SDA)[v]. The research shows that the A-G
of the Federation is statutorily empowered in his name to recover
back-years of all stamp duties, penalties, interest, debt owed to
the Federal Government in a summary manner under the
SDA. However, there is the challenge of lack of expertise
in the field of taxation by officers who administer the recovery
and some judges of the Federal High Court (FHC) before whom the
recovery process will be presented or adjudicated upon. There is
also conflict of law in some provisions of SDA as it relates to the
provisions of Federal Inland Revenue Service (Establishment Act
2007 (FIRSEA) etc. the work recommended therefore that SDA should
further be amended by the next Proposed Finance Bill 2021 for
effective administration, and also Judges of Federal High Court
should be trained on the general principle of taxation in Nigeria
for effective adjudication on tax matters. In conclusion; the
administration of Stamp duties and particularly the recovery of
back-year stamp duties if effectively harnessed will serve as a
tool for an increase in tax revenue generated by the Federal
Government.
2.1 INTRODUCTION
Stamp duties is an indirect tax imposed on all
dutiable instruments (i.e. legal or commercial
instruments listed under the schedule to the Stamp Duties Act as
being subject to stamp duties charges) requiring such
instruments to be stamped or denoted either physically or by
electronic means by the relevant Stamp Duties Commissioner upon
payment of the relevant fees prescribed under the stamp duties Act
paid by a person who is liable to pay the duties (mostly
the person who will naturally benefit under the instrument if
stamped).
Historically, Stamp Duties was first introduced in
Venice in the year 1604 and other European
Countries welcomed the idea; Spain in 1610,
Netherland in 1620, France in
1651, Denmark in 1657 and England
in 1694. After 299 years of the introduction of
Stamp Duties in the world (1604 to 1903), Sir
Fredrick Lugard (the then High Commissioner of the Northern
Protectorate) introduced the first Stamp Duties Ordinance
of 1903 which was later amended by Ordinance of 1923, 1928
and 1931. It is however worthy of note, the first holistic
Stamp Duties law enacted in Nigeria was the Stamp Duties
Ordinance of No.5 of 1935 (SDO). After independence; under
the 1963 Constitution of FRN, the said SDO was deemed as an Act of
the National assembly which was further amended in 1964 where
the following sections were inserted S.100, 102, 111, 112 and
114 etc and under Section 315 of the 1999 Constitution of
FRN SDO was further deemed as the act of National
Assembly under the constitution, hence the Act is
regarded as the Stamp Duties Act Cap S8 LFN 2004
(SDA), recently the SDA was amended by S.
52-56 of Finance Act 2019 which amended the following
Sections of SDA 2, 4,89, 90 and schedule of the Stamp Studies
Act.
On 30th June, 2020, the Secretary to the Government
of the Federation (SGF), Mr. Boss Mustapha, acting
on the directive of the President Muhammadu Buhari
(GCON), inaugurated the Inter-Ministerial Committee on Audit and
Recovery of Back Years Stamp Duties where he said thus:
“Stamp duty would be second to oil in revenue
generation.”[i]
The Global effect of Covid-19 on the world economy and the fall in
international price of crude oil which is the major source of
revenue to the Nigerian government has compelled the government to
look for an alternative source of funding to carry out its
expenditure; a source that is found in Stamp Duty taxes.[ii] The Attorney General in the
exercise of his power under Section 111 of Stamp duties
Act is to supervise and control fully the recovery of the
back-years stamp duties owed to the government and this is the
first of its kind in about 94 years since the
inception of Stamp duties Act in Nigeria. Similarly, the Federal
Inland Revenue Service under the leadership of
the Executive Chairman of the FIRS Mr. Muhammad
Nami a seasoned tax consultant and administrator has
revitalized and reinvigorated the machinery of effective
administration of stamp duties in Nigeria which has already began
to yield positive and encouraging result. As at April ending, 2020,
the balance in the Stamp duties collection account with CBN had
grown from =N=30 billion to =N=58 billion and =N=66 Billion by the
end of May, 2020[iii][2] this feat was
achieved largely as a result of the deployment of a new Application
Programming Interface (API) technology solution by the FIRS, which
is an – online real-time technology that makes the collection of
Stamp Duties much easier.
3.1 CONCEPTUAL CLARIFICATIONS OF TERMS
3.1.1 Stamp duties Audit: in the context of this
research means; the process in which the Tax Authority (FIRS)
officially examine, verify and analyze all dutiable instruments in
the possession of any duty payer where the liability to pay or the
obligation to ensure duty is paid; is on such duty payer in line
with the provisions of the Stamp Duties Act
3.1.2 Back-year Stamp Duties: this refers to
duties that ought to be paid under the Stamp Duties Act on
instruments executed in the preceding years (up to five (5) years)
for example in the year 2020, the back-years stamp duties will
include duties not paid in any of these years between (2015 to
2019)
3.1.3 Recovery: Means the act or process of
getting back or retrieval by the statutory office (either full or
partial) of Stamp Duties liabilities from the duty payer which
ought to have been paid on a dutiable instrument to the relevant
Tax Authority (FIRS)
3.1.4 Duty: Means any Stamp Duty fee for the
time being chargeable on any dutiable instrument before stamping
same under SDA.
3.1.5 Fines: Means sanction imposed in monetary
form for failure to pay duties on dutiable instruments or do an act
as required under the SDA
3.1.6 Debt: Means any money owed to Government
of the Federation under the SDA which may include but not limited
to ( duties not paid, fines, penalty or interest imposed and
judgment debt awarded in favor of Government etc)
3.1.7 Dutiable Instruments: Means all legal and
commercial instrument or document classified under the Stamp Duties
Act as subject to stamping upon payment of duty.
3.1.8 Compoundment of offense: Means the
process by which the tax offender or defendant in tax criminal
prosecution applies to the appropriate office for his/her tax
offence to be settled upon payment by him/her of all the Stamp
Duties liabilities, penalties, fines and interest that follows in
order to withdraw the criminal charge against him.
4.1 LEGAL FRAMEWORK FOR THE AUDIT AND RECOVERY OF
BACK-YEAR STAMP DUTIES BY THE ATTORNEY GENERAL OF THE
FEDERATION.
The basis upon which the back-years Stamp Duties (debt,
penalties and interest) can be recovered for the government in the
name of the Attorney General of the Federation are as follows:
- Section 111 SDA empowered the G of the
Federation (in his name) to recover all duties, penalties,
interest, debt owed to the government in a summary manner. Equally,
Section 174 of the 1999 Constitution of the FRN
which empowered the A-G Federation to
institute and undertake any criminal proceedings against any person
before any Court of law in Nigeria in respect of any offence
created by or under any Act of National Assembly (including
offences as it relates to recovery of back years stamp duties under
Stamp Duties Act). In the same line, Administration of
Criminal Justice Act (ACJA) 2015 will be used by the
office of the A-G of the Federation where his office decides to
prosecute the tax offenders who failed to respond to his demand
notice issued by the office of A-G Federation for the payment of
back-years stamp duties after audit and duties liability have been
established. - Section 114 SDA permits the A-G of the
Federation to go as far back as 5years (preceding years) in
recovery of duties, penalties, interest, debt owed to government
under the Stamp Duties Act. While Section 110 SDA
empowers the A-G of the Federation to include any current fine,
penalties or duties liability in the process of back-years duties
recovery under the SDA. - 32 of the FIRSEA 2007 provides for interest of
10% of the amount of tax payable to be charged on any taxes not
paid (including Stamp Duties) within one month after issuance of
Demand notice. - Federal High Court Civil Procedure Rule of
2019 provided for un-defended list procedure for summary
recovery of debt owed to the Government, if the office of the A-G
of the Federation decides to adopt this recovery by civil matter.
And 83 Sheriffs and Civil Processes Act,
Cap S6 LFN Revised Edition 2010) makes provision for how
an order of Court to be obtained in cases of recovery of stamp
duties debt owed to the Government under the un-defended list
procedure of the FHC can be enforced.
5.1 THE OFFICE OF ATTORNEY GENERAL (AG) OF THE
FEDERATION AND MINISTER OF JUSTICE UNDER THE 1999
CONSTITUTION.
5.1.1 HISTORIOCAL EVOLUTION OF THE OFFICE OF A-G
FEDERATION:
Under the English Legal System, the concept of an Attorney General
of a Country dates back to the Anglo-Norman system of government.
During this time, French legal terms were introduced into the
English system of government. The first mention of the term
“Attornus Regis,” or “King’s
Attorney,” was made in 1253. In the year
1472, the first formal appointment was made in
England. The office of the Attorney-General has always been of
great importance; the Attorney-General was both a Legal
Representative of the king and Royal Government as well as the
“parens patriae,” or “guardian of public
interests.” As such, the Attorney-General was charged with
protecting the rights of both the crown and the public . Therefore
Her Majesty’s Attorney General for England and
Wales is one of the Law Officers of the Crown.
The Office of Attorney-General came into being in Nigeria as
part of the received English Law under the Statutes of General
Application (SOGA) which provide to the extent that all laws
enforced in England as at 1st January 1900 (excluding Common Law
and Equity) is deemed to be part of the Nigeria Legal System.
However, before the Independence the A-G of the crown performs the
responsibility of this office from England. After the independence
in 1960, the 1960, 1963 and 1999 Constitution of the
FRN provided for the office of Attorney-General of the
Federation in Nigeria and since 1960 to 2020,
Nigeria had 23 numbers of Attorney-General Federation beginning
from the first A-G Federation Hon. Justice Teslim Elias
(CFR, GCON 1960-1966) to the present A-G of the
Federation Mr. Abubakar Malami (SAN) who was appointed on 11th
November, 2015
5.1.2 THE OFFICE OF THE A.G OF THE FEDERATION
(OAGF): The office of A-G of the Federation is by
political appointment made by the President; the occupant of such
office equally serves as the Minister of Justice. The office is
provided for under 150(1) 1999 Constitution of the
FRN as the Chief Law Officer of the Federation and the
Minister of Justice. The section provide thus:
“There shall be an Attorney-General of the
Federation who shall be the Chief Law Officer of the Federation and
a Minister of the Government of the Federation”
The Attorney-General as the Chief Law Officer of the Federation
can exercise his power and performs his functions either personally
or through any Law officer in the Federal Government Ministries,
Department or Agency (MDAs).
The duties of Attorney-General of the Federation are enormous
apart from those duties expressly provided for under the
constitution. For instance under S.174 of the 1999
Constitution, the A-G of the Federation is
constitutionally empowered to institute and undertake any criminal
proceedings against any person before any Court of law in Nigeria
in respect of any offence created by or under any Act of National
Assembly. The office of A-G of the Federation is responsible for
but not limited to thefollowing duties:
- Ensuring accessibility to justice for all persons in
Nigeria. - Providing Legal Advice to Federal Government on its treaties
obligation, facilitating the transaction of government polices into
legislation through the drafting of Executive Bills in accordance
with directives from the President or Federal Executive Council
(FEC) for Laws to be enacted by the National Assembly. - Providing legal advice to the Federal Government Ministries,
Statutory bodies, and Departments and Agencies of the Federal
Government; Preparing subsidiary legislation for Federal government
and MDAs; and vetting contract agreements on behalf of Federal
Government and its MDAs. - Prosecute criminal matters on behalf of the Federal Government
through law officers in his office; Defending the Federal
Government, Ministries, Statutory bodies, Departments and Agencies
of Federal Government in all Civil matters instituted against them
where the Act establishing such MDAs did not provide for their in
house law officers to prosecute and defend civil cases on behalf of
their institution. - Attending the Federal Executive Council meeting where policies
are formulated for the Federal Government; - Performing other duties assigned to his office by the defferent
Act of National Assembly such as Section 111 of Stamp
Duties Act on the recovery of Stamp Duties debt owed to
the government. - He is equally appointed a statutory member of Board of many
Federal Government MDAs such as FIRS etc.
6.1 ROLE OF THE A-G OF THE FEDERATION IN THE RECOVERY OF
BACK-YEARS DUTIES UNDER THE STAMP DUTIES ACT.
The involvement of the Office of Attorney-General of the
Federation in the recovery of back-years Stamp Duties is centered
on the provision of Section 111 of the Stamp Duties
Act which provide thus:
“All duties, fines and debt due to the Government of
the Federation imposed by this Act shall be recoverable in summary
manner in the name of the Attorney-General of the Federation or of
the State.”
It is evidently clear by the above Section that, once it is
established that duties, liabilities, fines or debt is owed to
Federal Government under any provision of the Stamp Duties Act, the
A-G Federation is statutorily empowered to summarily recover same
from any person or body of persons liable to pay such debt, duties
and or interest owed to Federal Government.
The National Assembly in their wisdom have put a limit to how
far the A-G Federation can go in back-years stamp duties recovery
of such debt, duties and interest owed to the Federal Government.
Section 114 of the Stamp Duties Act provides
thus:
“All proceedings for recovery of any duties, fines,
penalty and debt due to the Government of the Federation imposed by
this Act, MAY be commenced or prosecuted at
any time within five years after the offence committed by reason
whereof such duty, fine, penalty or debt shall be
incurred”
Interestingly, if one applies the literal rule
of interpretation of legislation in respect of S.111 &
S.114 of SDA provided above, one will naturally come up
with the following observations.
- The A-G Federation is unequivocally empowered to recover all
duties, fines, penalty and debt due to the Government of the
Federation under SDA. - The Recovery to be made by the A-G Federation is limited to
only 5 preceding years and no more. - What is to be recovered by the A-G Federation is not only
duties, fines, penalty and debt but includes interest on such
duties, fines and penalties not paid. The word
“debt” used in the Section in my opinion includes
“interest” owed to the government on duties (tax)
not paid on the rate as provided by Section 32 of FIRSEA
2007. - The A-G of the Federation in recovery of all duties, fines,
penalty and debt due to the Government of the Federation under SDA
MAY prosecute some tax offenders who
failed or neglected to pay their duties liabilities established
after the Demand Letters was served on them by the Office of the
A-G of the Federation. The use of the word “May”
in Section 114 SDA signify elective and not
mandatory, meaning if the office of A-G of the Federation so
desires; he may prosecute the tax offender using criminal
prosecution; more so that such power is constitutionally provided
for under Section 174 of the 1999 Constitution of
FRN which empowered the A-G Federation to institute and
undertake any criminal proceedings against any person before any
court of law in Nigeria. This is in respect of any offence
created by or under any Act of the National Assembly (including
offences as it relates to the recovery of back years duties under
SDA) of the A-G Federation if he so desires may use civil procedure
to recover such debt owed to the government.
Section 110 SDA stipulates to the extent that
the A-G of the Federation can include any current fine, penalty or
duties liability in the process of back years duties recovery under
the SDA. For the avoidance of doubt the S. 110 SDA
provide thus: “Proceedings for the recovery of any duty
imposed by this Act or for the recovery of any debt due to the
Government of the Federation under this Act may be included in any
proceedings for the recovery of a fine or penalty under this
Act”
7.1 THE POWER OF THE PRESIDENT IN COMPOUNDMENT OF
OFFENSES UNDER SDA: The Office of Attorney General of the
Federation in exercise of his power under 111 of
SDA either through the Law Officers in his office or
through a Recovery Agent appointed by the A.G Federation, Once the
A.G or the Agent so appointed has conducted an audit, established
and declared the Stamp Duties liabilities of a duty payer on a
dutiable instruments, such stamp duties liability declared cannot
be reduced or mitigated by anybody, or any office including the
Office of Attorney-General of Federation except the President or
the Governor as the case may be. For avoidance of doubt,
Section 112 SDA provides thus;
“The amount to which any person is declared to be liable
in respect of any fine or penalty and the amount due as a debt to
the Government of the Federation under this Act shall not, except
as hereinafter provided, be subject to any
mitigation.”
Section 113 SDA provide thus:
“The President or governor
as the case may be, may in his discretion MITIGATE any fine or penalty or debt due to the
government of the Federation under this Act or STAY or COMPOUND any
proceedings for recovery thereof and may also after judgment
further mitigate or remit any such fine, penalty or
debt”
In essence, under the process of recovery of back-years Stamp
Duties owed to the Federal Government by the A-G
Federation, the President has the power to mitigate, reduce Stamp
Duties liability for any tax offender under the SDA.
It is worthy of note that, any tax offender under the SDA who is
charged to Court by the A.G Federation in prosecution of an offence
committed by such person under the SDA; can apply to the President
through the Office of the A-G of the Federation for the
Conpoundment of Offense the charged. The President under
S.113 of SDA has the power to compound the offense
and request such offender to pay certain amount of money upon which
the criminal prosecution will be discontinued accordingly. An
application for compoundment can be made to the President during
the pendency of criminal proceeding before Court in respect of
recovery of back years duties, and the decision of the President on
such application will be communicated to the applicant and to the
Court through any officer of the Law from the office of the
Attorney General of the Federation.
8.1 CHALLENGES AND LIMITATIONS.
There are many limitations that can pose a challenge to the
effective and smooth implementation of the back-year Stamp Duties
recovery by the A-G Federation under the SDA, this includes but not
limited to the following:
- Some of the sanctions provided as penalty and fines for non
compliance with the provision of the Stamp duties Act which is
equally not covered by the Federal Inland Revenue Service
Establishment Act 2007 are ridiculously low and has defected the
purpose of sanction as deterrence mechanism. - Despite the provision of Section 24(f) of the 1999
Constitution of FRN which put an obligation on all citizen
to pay their taxes promptly to the government, many of the duty
payers may not be patriotic enough to comply with Demand Letter
issued by the A-G of the Federation in the process of Back year
Stamp Duties recovery and such person or body of person may result
to litigation which will invariably pose a challenge in the
process. - Though Section 111 of SDA empowers the A-G of
the Federation to recover in a summary manner all debt, duty and
penalty owe to the Government under SDA. The SDA did not further
define the special procedure for Court to adopt which the
legislature had in mind when they inserted the word
“recoverable in summary manner” in the
section. - The back year stamp duties recovery process in many cases
particularly in respect of Private sector duty payers; may end up
in Federal High Court (FHC) for enforcement. And the reality is
that, Honorable Justices of the FHC though are very versatile on
general aspect of Federal laws; but may be lacking in knowledge and
experience in the field of taxation and Stamp Duties Administration
specifically.
i, The provision for compoundment of offence
under Section 113 of SDA which empowered the
President to compound offences under the Stamp
Duties Act is in conflict with S.48 of FIRSEA
which empowered the Service to compound offence
under the FIRSEA; the challenge is that, some of these offences
under both Acts are similar. But worthy of note is that
Section 68 of FIRSEA provide for the supremacy of
Federal Inland Revenue Service (Establishment) Act 2007 over all
other Federal Tax laws including the Stamp Duties Act which is
Item 6 of the 1st schedule to the
FIRSEA.
ii, Sections 111 & 110 of SDA as provided above
is in conflict with Sections 2, 8(1)(b)(c), 25 & 47 of
FIRSEA as regard to the recovery of current year
Stamp Duties by A-G Federation. For instance, the year
2021 is the current year of stamp duties collection, if the A-G
Federation decides to extent back year stamp Duties recovery to
include 2021 under S.110 of SDA; this will encroach or impinge into
the jurisdiction of the FIRS on the administration of stamp duties
in Nigeria which include assessment of current year duties,
collection and accounting of same in accordance to Federal Inland
Revenue (Establishment) Act 2007
iii, Section 111 of SDA which empowered the A-G
Federation to recover back-years duties did not provide the manner
or procedure in which such tax revenue recovered from unpaid duties
will be accounted for. This in my opinion may pose a challenge as
to where the money will be paid to and who is
accountable for it under the law?. Taking into
cognizance that Section 2 of FIRSEA empowers the
Service to collect all Federal Taxes including Stamp duties and
to account for it. While Section
8(1)(b)&(c) of FIRSEA further provides that:
“The Service (FIRS) shall
(b)Assess, collect, account and
enforce payment of taxes as may be due to Government or any
of its agencies.
(c)Collect, recover and pay to the
designated account any tax under any provision of this act
or any other enactment or law.” (Stamp Duties Act
is item 6; one of the Federal Tax listed under the 1st
Schedule to FIRSEA)
The literal interpretation of the above means: all duties
collected or recovered under any provision of the SDA based on the
supremacy of FIRSEA by virtue of Section 68 of the
FIRSEA such Tax revenue shall be accounted for in
accordance to Section 8(1)( c) of the FIRSEA by
the Chief accounting officer of the FIRS as provided under
Section 11(b) of FIRSEA.
6. Challenges that may be faced in the process of recovery of
back year Stamp Duties from Ministries, Departments and Agencies
(MDA’s) of Government under Section 111 of
SDA is that, many MDAs may not have the fund readily at
hand to pay duties owed to Government when Demand Notice is served
on them. However Section 24 of FIRSEA has
empowered the Accountant General of the Federation to deduct at
source from the budgetary allocation, un-remitted taxes due from
MDAs and shall not later than 30days
thereafter transfer such deduction to the Service
(FIRS). The conflict that may arise here is that,
even though Section 111 SDA empowers the A-G
Federation to recover duties, penalty and debt owed to the Federal
Government, where the Accountant-General of the Federation is
called upon to deduct from the source in the process of recovery of
such duties not paid by MDAs, the Account General of the Federation
must as a matter of law based on Section 24 & 68 of
FIRSEA transfer all the deduction made to the CBN
dedicated revenue account open for FIRS collection within 30days
after and not to the A-G Federation under whose name the recovery
is made.
9.1 RECOMMENDATIONS:
Having carefully studied the likely challenges the implementation
of the recovery of back-years Stamp Duties under the SDA may face,
I make the following recommendations as a way forward.
1. There is the need for FIRS to make use of the opportunities
available to it in the ongoing process of drafting the proposed
Finance bill 2021 which may be submitted by the President to
National Assembly together with 2022 Budget as was done in the
preceding year of 2020. FIRS should make recommendations for the
amendment of the SDA amongst others on the following suggested
critical areas:
a. There is a need to review upward; penalty
and fines for some offences under Sections 11 (3),
S.13(1)&(2), 23(1) S.25 and S.27(2) S.32(1), S.42(2) &
S.87 of the Stamp Duties Act which are ridiculously low
and are not intendment with the current economic realities of
Nigeria.
b. This Section 111,110 & 113
SDA was introduced in 1964 Stamp Duties Act Amendment when
the then Federal Board of Inland Revenue (FBIR) and the current
FIRS was not yet established and when the statutory duty to collect
stamp duties was on the Federal government under Section
4(1) of SDA before the amendment by S.53 of Finance Act
2019. There is therefore a need to amend such sections to bring it
in conformity with the provision of FIRSEA 2007 No. 13 in line with
S.68 of FIRSEA.
c. A special summary Procedure for recovery of
stamp duties, penalty and fine owed to the Government under the SDA
should be prescribed or inserted by the National assembly in the
proposed Finance Act to guide the Court.
d. The mandatory requirements for all Federal
Ministries, Departments and Agencies of government and Financial
Institutions to key into the Stamp duties collection automation
system should be inserted into the SDA via the proposed Finance Act
2020.(So that for instance 1% duties on all contract agreement will
be deducted at source by the MDAs and be paid on behalf of the
contractor from the first payment of such contract sum)
e. The Schedules to SDA should be amended and
reorganized into three (3) schedules namely: 1st
schedule for all Ad-valorem dutiable instruments,
2nd Schedule for Fixed dutiable instrument and
3rd Schedule for other general matters under SDA.
This is for precision and simplicity of the Act.
f. The rights of duty payers in the process of
recovery of debt, duties and penalty owed to the government of the
Federation in the name of the Attorney-General of the Federation as
it is currently constituted should be well spelt out in the SDA to
avoid tax disputes.
2. The Ministry of Finance through the Presidency should
recommend that the National Assembly by resolution of the both
houses under Section 116 of SDA increase duties
payable on certain instruments that are ridiculously low,
particularly the fixed duties instrument with exclusion of money
deposit receipts (whether physical or electronically.)
3. The A-G of Federation should request the Chief Judge of the
Federal High Court to designate Judges in each of the six (6)
geopolitical zones in Nigeria that will handle tax matters majorly
in addition to other matters that may be assigned to such judge in
order to promote speedy conclusion of tax cases pending when a
Federal Tax Court is established.
4. The Federal Ministry of Justice (FMOJ), National Judicial
Council (NJC), Federal Ministry of Finance (FMOF) through it Agency
FIRS by extension should organize a continues holistic training of
some selected judges of the Federal High Court on tax practice and
procedures in Nigeria as this will enhance their skills in speedy
adjudication of tax matter brought before them.
10.1 CONCLUSION:
Government needs tax revenue to effectively implement its yearly
budgets, and if citizens by extension corporate bodies or
institutions don’t pay tax or don’t pay the right tax at the time
stipulated by law; it will affect tax revenue generation. Hence the
effective recovery of back-years Stamp duties by the Office of
Attorney General of the Federation as it is presently constituted
under the Stamp Duties Act will serve as a tool for an increase in
tax revenue generation. There is need for cooperation and
partnership between the Federal Ministries, Departments and
Agencies of government for the smooth administration of Stamp
Duties in Nigeria. For instance, if 1% of all contract sums awarded
by both Federal and State Government to corporate organizations for
execution in respect of capital budget of the Federal Government
(including Federal Ministries, Departments and Agencies of
Government) and State government (including State MDAs) are paid
and remitted to government as tax revenue every year, it will boost
the annual revenue generation of the government.
- CONCLUSION:
Government needs tax revenue to effectively implement its yearly
budgets, and if citizens by extension corporate bodies or
institutions don’t pay tax or don’t pay the right tax at the time
stipulated by law; it will affect tax revenue generation. Hence the
effective recovery of back-years Stamp duties by the Office of
Attorney General of the Federation as it is presently constituted
under the Stamp Duties Act will serve as a tool for an increase in
tax revenue generation. There is need for cooperation and
partnership between the Federal Ministries, Departments and
Agencies of government for the smooth administration of Stamp
Duties in Nigeria. For instance, if 1% of all contract sums awarded
by both Federal and State Government to corporate organizations for
execution in respect of capital budget of the Federal Government
(including Federal Ministries, Departments and Agencies of
Government) and State government (including State MDAs) are paid
and remitted to government as tax revenue every year, it will boost
the annual revenue generation of the government.
Written By Zhihwi Dauda Esq. (LL.B, B.L, LLM,
ACIT), E-mail: daudathihwi@gmail.com[3] Phone:
08059538671
[1] Z.
Dauda “An Over View of the Stamp Duties Administration in
Nigeria” an-overview-of-the-stamp-duties-administration-in-nigeria-with-the-finance-act-2019-amendment/[4]
accessed on 18/8/2020.
[2] S. 58 Finance Act
2019,S. 2 and 25 of FIRSEA and Item 6 of 1st Schedule to
FIRSEA 2007
[3] https://dailypost.ng/2020/07/01/nigerian-govt-moves-to-recover-6-year-stamp-duty-backlog/[5] accessed on
18/8/2020.
[4] The
Inter-Ministerial Committee (IMC) for Audit and back-year Stamp
Duties recovery was inauguration of the by Mr Boss
Mustapha Secretary to the Government of the Federation
(SGF)
[5] Stamp Duties
Act Cap S8 LFN (2004) Revised Edition
Volume 13 LFN 2010
[6] Vanguard news paper on
line
https://www.vanguardngr.com/2020/06/fg-moves-to-recover-unremitted-5-year-stamp-duty/
(Accessed on 23 of August,2020)
[7] Vanguard news paper online
https://www.vanguardngr.com/2020/07/firs-muhammad-nami-to-deliver-keynote-address-on-stamp-duty-webinar/
Accessed on 26th July, 2020.
[8] Ibid Foot Note no.1
[9] https://www.vanguardngr.com/2020/08/firs-generates-n3bn-from-stamp-duty-weekly-%E2%80%95-nami/[6] Accessed on
26th July, 2020.
[10] Sarah Winkler[7] “History of an Attorney
General” https://people.howstuffworks.com/government/local-politics/attorney-general.htm[8]
Accessed on 28th August, 2020
[11] The Attorney General
serves as the chief legal adviser to the Crown and the Government
in England and Wales. In 1673 the Attorney
General officially became the Crown’s adviser and representative in
legal matters, although still specializing in litigation rather
than advice. Wikipedia “A-G for England and Wales https://en.wikipedia.org/wiki/Attorney_General_for_England_and_Wales[9]. Accessed on
28th August, 2020
[12] Godwin
Iheabunike, Esq. (Deputy Director FMOJ) & Legal
Adviser PTAD. In his paper “Powers and Duties of the
Attorney-General of the Federation” being presentation made
during the in house training program organized by the Department of
Human Resources of the Federal Ministry of Justice for the
promotion examination candidates.
[13] https://www.justice.gov.ng/index.php/the-ministry/history/past-attorney-generals-of-the-federation[10]. Accessed on 28th of
August, 2020.