Stamp Duty On Stock Market Transaction Begins December 7 – NSE

The implementation of the Stamp Duty on stock market transactions will begin on December 7.

The Nigerian Stock Exchange confirmed the development while given clarifications on the public notice released by the Federal Inland Revenue Service in July, itemizing contract notes at an Ad-Valorem rate of 0.08 per cent up from 0.075 per cent.

The circular released by the Nigerian Stock Exchange stated that the Central Securities Clearing System Plc will adjust its system to implement the automated deduction of the Stamp Duty rate of 0.08 per cent.

The NSE in the circular seen by THE WHISTLER on Sunday directed Dealing Members to immediately engage their software vendors for the required adjustments to their technology applications, to reflect the 0.08 per cent rate ahead of the effective date of 7 December 2020

It reads, “In reference to the Public Notice in the Business Day Newspaper of Monday, 20 July 2020, captioned ‘Clarification of Administration of Stamp Duties in Nigeria’ issued by the Federal Inland Revenue Service.

“The Public Notice provided, amongst other things, information on dutiable instruments and the applicable flat or Ad-Valorem rates, with Contract Notes 1 itemized at an Ad-Valorem rate of 0.08 per cent. As you know, this is at variance with the current rate of 0.075 per cent administered in the Nigerian Capital Market.

“To that extent, Dealing Members of the Nigerian Stock Exchange are to note the following:Effective December 7, 2020, the Central Securities Clearing System Plc will adjust its system to implement the automated deduction of the Stamp Duty rate of 0.08 per cent.

“Dealing Members are required to immediately engage their software vendors for the required adjustments to their technology applications, to reflect the 0.08 per cent rate ahead of the effective date of 7 December 2020.

“Dealing Members are required to communicate the changes above to their clients immediately, ahead of the effective date.”

The FIRS had in July listed at least 50 types of transactions that are eligible for stamp duty deductions.

Stamp Duty is a tax payable in respect of dutiable instrument as provided under the Stamp Duties Act, CAP S8, LFN 2004 (as amended).

Such instruments include Agreements, Contracts, Receipts, Memorandum of Understanding, Promissory notes, Insurance policies and others stipulated in the Schedule to the Stamp Duties Act.

It is also chargeable on both physical and electronic instruments through Ad-valorem, where duty payable is a percentage of the consideration on an instrument; or Flat Rate, where a fixed sum is chargeable irrespective of the consideration on dutiable instrument or document.

The FIRS had noted that the recently inaugurated FIRS Adhesive Stamp is not the same as the postage stamp administered by NIPOST for the purposes of delivery of items and documents.