Stamp duties are taxes payable to either the Federal or State Government on a wide range of legal documents. These include conveyances on sale, bills of exchange, agreements, contracts, letters and certificates of admission, instruments of apprenticeship, insurance policies, and more. The legal backing for this tax is the Stamp Duties Act of 1939, as amended by several subsequent laws, and consolidated in Volume 22, Cap 411 of the Laws of the Federation of Nigeria (LFN) 1990.
This article provides clarity on:
-
The legal effect of an instrument that is not duly stamped
-
Where and how to pay your stamp duties
-
Whether exemptions are available
-
Instruments that attract reduced duty
-
Time limits for stamping
-
Penalties for late payment
Legal Effect of an Instrument Not Duly Stamped
According to Sections 19 and 22 of the Stamp Duties Act, unstamped instruments are inadmissible in Nigerian courts. However, exceptions exist for documents relating to property or actions outside Nigeria and those used in criminal proceedings.
Section 22 also allows a court, arbitrator, or referee to accept previously unstamped instruments as evidence if all unpaid duties and penalties are settled before submission.
Where to Pay Stamp Duties
Sections 4(1) and (2) of the Stamp Duties Act empower both Federal and State Governments to charge and collect duties under different conditions:
-
Federal Inland Revenue Service (FIRS) collects stamp duties when a company is a party to the transaction.
-
State Governments collect stamp duties for instruments executed between individuals only.
The rule of thumb: If a company is involved, go to FIRS; if not, go to the state stamp duty office.
⚠️ Important: If you pay the duty to the wrong authority, refunds are nearly impossible.
Exemptions from Stamp Duties
There are several exemptions under the law which could save individuals and companies significant amounts:
1. Liquidation Sales/Transactions
Under Section 513 of the Companies and Allied Matters Act (CAMA), certain instruments used during liquidation are exempt — but only if:
-
The company is being wound up by court order or voluntary creditor action.
-
The documents include deeds, assignments, discharges, mortgages, and powers of attorney directly linked to the liquidation.
2. Treaties and International Agreements
Transactions under treaties or agreements between:
-
The Federal Government and foreign private corporations,
-
International organizations, or
-
Foreign governments,
are often explicitly exempted from stamp duties.
3. Company Reconstructions and Amalgamations
Section 104 of the Stamp Duties Act exempts documents related to mergers and acquisitions such as:
-
Transfers of debt,
-
Share vesting instruments,
-
Conveyances within 12 months of incorporation of the transferee company.
However, debts incurred less than two years before filing may not be exempt (except debts to banks or trade creditors).
Other Exemptions Provided by the Act
-
An unstamped bill of exchange used to prove the contents of a lost or destroyed properly stamped counterpart (S.43).
-
Conveyances based on court orders transferring property interest to a purchaser or representative are also exempt.
