By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-Despite the explanation of the Central Bank of Nigeria (CBN) last Thursday on some misconceptions among members of the public on the implementation of N50 stamp duty on bank transactions, Barrister Bisi Iyaniwura, a Lagos based Investment and Commercial Lawyer said the action was illegal.

Barrister Iyaniwura said this in an interview with InvestAdvocate in Lagos Nigeria.

He said the CBN in its circular on the N50 stamp duty charge on every banking deposit transactions over N1, 000 did relied on three (3) authorities at legitimising the said charges. “These are the Stamp Duty Act 2004, Financial Regulation 2009 and the Federal High Court decision in the KASMAG case,” he noted.

“To appreciate the faulty basis of the CBN for the charge we need to first understand what stamp duty all about. Stamp duty is a tax paid on Documents such as Agreements, Promissory notes, Bills of Exchange, Deeds etc. Stamp Duty is never charged on Cash transactions and this position is expressly supported by both the law and practise of stamp duties globally,” Barrister Iyaniwura affirmed.

According to him, the stamp duty is actually a 1939 law that was incorporated in the Nigerian law by virtue of our society of general permutation in the post independent era; it was also incorporated in the 1990 law when Nigeria did the reversed law of the Federation and 2004 revised laws of the Federation.

“There is no provision in the law that allows the government to charge stamp duties on cash deposit. In further support of the earlier argument above, a cursory look at the Cheque books used by Nigerian Banks for transactions contains express evidence that stamp duty has been paid on every leaflet of the Cheque book, therefore the new imposition by the Federal Government through the CBN will amount to double taxation on banks transactions,” he added.

On the second ground of support relied upon by the government which is the Financial Regulations 2009, “this can never be a basis for deductions,” Barrister Iyaniwura noted.

According to the Commercial Lawyer, a financial regulation is simply a set of regulations made by the Honourable Minister of Finance in accordance with the relevant enabling law to regulate the internal handling of government financial matters particular cash and non cash receipt by any person purporting to collect same on behalf of the government.

He says financial Regulations are legal instruments that empower and guide all public officers in carrying out government financial transactions including the receipt, custody of and accounting for government revenues; the procurement, custody and utilisation of government stores and assets, and the disbursements of funds from the major funds of government. “So the question is how does a document made purposes to guard the internal working of the Civil Service be grounds for the CBN’s action,” he queried.

The Third ground is the case decided by the Federal High Court Lagos, this case only decides that NIPOST is the legitimate government agency vested with the power to collect Stamp duties to the exclusion of any other person or body, he noted. “The case did not at all make any decisions on the nature and type of stamp duty that can be collected,” Barrister Iyaniwura noted.

He said the case did not at any point decide the issue of what stamp duty is collected and how is it collected; rather the case has to do with the right of NIPOST to collect stamp duty. “It should not be a basis or an authority for the government to now say they are collecting stamp duty on our deposits. This can discourage savings; the government that needs to encourage savings is now discouraging it. Where is the equity if you put N1000 in your account and they deduct N50, if you put N1.0 billion on the same single transaction you pay N50,’ he affirmed.

Ibrahim Mu’azu, CBN’s director, corporate communications in his explanation while speaking to journalists in Abuja last week said the guidelines simply advised banks and other financial institutions operating in the country to commence the collection of N50 on eligible transactions only.

According to him, such eligible transactions include all receipts given by a bank or financial institution in acknowledgment of services rendered in respect of teller deposits and electronic transfers for the value of N1, 000 and above.