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.

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Lagos (INVESTADVOCATE)-Oscar Onyema, the chief executive officer (CEO) of the Nigerian Stock Exchange (NSE) on Thursday said demutualisation is amongst the top three (3) priorities initiatives of the Exchange for 2016.

Onyema who made this disclosure at the NSE 2015 market recap and outlook for 2016 said the prioritised three (3) initiatives for 2016 is aimed at achieving the NSE’s three (3) strategic objectives of which include, Increasing the number of new listings across five (5) asset classes, increasing order flow in the five (5) asset classes; and operating a fair and orderly market based on just and equitable principles.

According to him, the capital market has an opportunity to effectively finance the Federal Government of Nigeria’s (FGN’s) proposed budget deficit for 2016 and the implementation of its Medium Term Expenditure Framework (MTEF). “With greater clarity on policy direction, we anticipate the return of investors who had remained on the sidelines throughout 2015,” he affirmed.

Onyema said the return of the investors on the sidelines is predicated upon return of investor confidence as a result of effective implementation and communication of the government’s economic blueprint; credibility in monetary policy stance, relative stability in the macro economy (Oil price stability above benchmark targets, increase in tax collection to Gross Domestic Product (GDP) ratio amongst other and improved security.

“The NSE will focus on executing its strategy in order to continue to provide a credible platform for financing the economy. To this end, we intend to intensify engagement efforts with the FGN,” Onyema added.

He noted that the downturn from 2015, has already continued into the New Year and 2016 is anticipated to be a challenging year for the capital market and the domestic economy. “We intend to continue our collaborative efforts with the new administration and other private sector players to create a framework for financing the Nation’s infrastructure and capital requirements. Additionally, we plan to work with the FGN to ensure that the appropriate messaging is conveyed to the investor community,” the NSE CEO said.

Onyema further affirmed that the current state of the market creates both challenges and opportunities for investors and believe’s that taking a portfolio approach to investing provides the best risk adjusted alternative for participating in the capital market.

He reported that the NSE’s flagship index, the NSE ASI, declined by 17.4 percent in 2015 closing the year at 28,642 points after starting the year relatively flat. “This is due to a combination of aforementioned factors including political risk, currency volatility, and uncertainty in global crude oil prices,” he added.

He revealed that the NSE Banking Index was the worst hit plunging 23.6 percent, followed closely by the NSE 30 Index and NSE Main Board Index, (both down 17.6 percent); all the NSE market indices performed poorly, relative to their 2014 performance, except for NSE Industrial Index which saw an uptick of 1.3 percent.

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Following the increase in inflation rate, financial experts have said that the yields on short-tenored Treasury Bills and FGN Bonds may rise as temporary reaction to the increase.

A report made available to our correspondent on Wednesday by FSDH Merchant Bank, however, stated that the yields were likely to drop next month.

It said, “The yields on short-tenored Treasury Bills and FGN Bonds may rise as temporary reaction to the increase in inflation rate. In our view, this will be short-lived as our projections point to a drop in inflation rate in March 2013.”

The report added, “In the short term, the Central Bank of Nigeria will rely on open market operations to manage the liquidity in the system. The implication of this is that inter-bank rates and yields on fixed income securities at the secondary market will be influenced by the extent of liquidity in the system.”

The Monetary Policy Committee, in its second meeting of the year, retained the Monetary Policy Rate at 12 per cent and maintained the symmetric corridor of +/-200 basis points around the MPR.

The committee also retained the Cash Reserve Ratio at 12 per cent; the Liquidity Ratio at 30 per cent and the Net Foreign Exchange Open Position at one per cent.

Meanwhile, the Governor, CBN, Mr. Lamido Sanusi, said he supported keeping the benchmark interest rate on hold to contain inflation.

Bloomberg quoted Sanusi on Tuesday as saying, “My own inclination is to just hold and just continue doing what we’re doing, because it has worked very well. But I’m only one vote in the MPC. However, the votes to ease are beginning to increase.”

Sanusi stated that the impact of interest rates below inflation could be “horrendous” for economic stability.

He, however, said, “In the short term, the country has to live with high rates.”

For a ninth meeting, the 12-member MPC, led by Sanusi, left the benchmark interest rate at a record high of 12 per cent to help bolster the naira and keep inflation below 10 per cent.

Three members voted for a reduction, up from two in January, to support the economy.

Inflation in Nigeria accelerated to 9.5 per cent in February from nine per cent in the previous month.

At the same time, the naira has dropped 1.3 per cent against the dollar this year, making imports more expensive.

Source: Punch (By Ademola Alawiye)

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