In the era of declining oil revenues and the government’s drive to shore up tax revenues, it is no wonder that our proverbial Caesar – the Federal Inland Revenue Service (the “FIRS”) - is seeking to clarify the chargeable rates on various instruments and enforce payments of stamp duties more efficiently. Whilst the FIRS’ actions are laudable, any such actions by the FIRS must be within the ambit of the Stamp Duties Act (the “SDA”). To put this simply, Caesar cannot ask for more than the law permits.
This article will examine the FIRS’ public notice issued in December 2016 (the “Public Notice”), in which the FIRS announced the establishment of new Stamp Duties Offices and location of existing ones in all states of the Federation and provided a list of instruments and their chargeable rates, which was stated to be in accordance with the SDA.
In particular, paragraph B7 of the Public Notice specifies that “loan capital” and loan agreements are subject to stamp duty at an ad valorem rate of 0.125%. However, the SDA does not make an express reference to loan agreements and, these set of documents have in the past always been assessed and stamped by the Stamp Duty Office at a nominal rate of N500.00 (Five Hundred Naira).
Following the issue of the Public Notice by the FIRS, it is important to closely examine the definition of Loan Capital under the SDA and the general rules on the interpretation of tax statutes, to consider if the substantive provisions in the SDA on the stamping of loan capital can be construed to include loan agreements.
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