Stamp duties are basically taxes paid to the Federal or State Government on documents such as Conveyances on sale, Bills of Exchange, Agreements, Contracts or even instruments such as Letters and certificates of Admission, Instruments of Apprenticeship, Insurance Policies etc. the payment of Stamp Duties is backed up by legislation the law being the Stamp Duties Act 1939 as amended b numerous Acts and various resolutions and contained in Vol. 22 cap 411 LFN 1990.
The focus of this article is to acquaint you with useful information on the following: what is the legal effect of an instrument duly stamped? Where to pay your Stamp Duties? Can you be exempted from paying stamp Duty? What instruments that reduced duty? What is the time limit for stamping? What penalties apply to lateness?
Legal effect of an instrument not duly stamped
According to S.19 and S. 22 of the Stamp Duties Act an unstamped instrument will not be admissible in evidence in a Court of Law. This excludes instruments executed or relating to property situated or any matter or thing done or to be done outside Nigeria ands instruments given as evidence in criminal proceedings. Note that by S. 22 of the Stamp Duties Act a court, Arbitrator or Referee may permit you to pay all unpaid duties and penalties on an instrument to enable you for mall tender it in evidence.
Where do you pay stamp duty?
S4(1) & (2) of the Stamp Duties Act empowers the Federal and state Government to impose, charge, and collect stamp duties in different circumstances as I will explain shortly. The federal Government has he sole authority to impose, charge and collect.
Stamped duties in respect of instruments relating to matters between a Company and an individual, group or body of individuals. The state Government on the other hand has authority to collect Stamp duty in respect of instruments executed between individuals or persons. The key word to determine who to pay is “COMPANY' once at least one company is a party to the instruments you should go to the Stamp Duties Office of the Federal Inland revenue Service. All other instruments not involving a Company should be stamped at the State Stamp Duties Office. Note that Stamp Duty is one of the matters reserved to the Federal Government in the Exclusive Legislative list. Do you need to be reminded that refund is near impossible you pay to the wrong office?
Can you be exempted?
This is especially valuable for individuals or Company who find themselves faced with huge amounts of money to pay for Stamp Duty and need to find a way to reduce cost,. The exemptions include the following:
• Liquidation Sales/transaction
S. 513 of the Company and Allied Matters Act provides for an exemption on. certain instruments relating to a Company under liquidation. The liquidation must be a compulsory winding up order by a court or a creditors voluntary winding up to qualify hereunder. The instruments exempted by this section include; anu assurance, (which includes any deed, conveyance, discharge, assignment or surrender) mortgage, charge, or other encumbrance on any property or forming part of the asset was of the Company to be liquidated.
Other instruments include any power of attorney, proxy paper, writ or order in respect of the company's property. A property sold by a liquidator should therefore enjoy this exemption.
2. Treaties
Treaties/Agreements made wither between the Federal Government and Foreign Prevate Corporations, International Organizations or other Foreign
Governments in which it is most times specifically stated that documents relating to transactions byu the foreign private corporations, international organizations or foreign government are exempt from stamp duty.
• Company Reconstructions and Amalgamations
S. 104 of the stamp duties Act exmpts instruments in reconstructions and amalgamations such as a cons\veyance or transfer of sale assigning debts whether secured or unsecured of the sxisting company or instruments vesting or relating to the vesting of the undertaking or shares in the transferee company. However this except6ion shall not apply to debts (apart from debts due to banks or trade creditors) incurred less than two years before the proper time for making a claim of exemption. Furthermore, an instrument made for the purpose of transfer as stated above must be executed within 12 months of the date of the incorporation of the transferee company and were the instrument made for effecting the conveyance or transfer is made within the same twelve months of the filing of the same agreement or its particulars with the CAC.
Other exemptions under the Act
The Stamp duties Act itself provides exemptions which include the following;
An unstamped Bill of Exchange in a set used to prove the contents of another part of the set (duly stamped) which is lost or destroyed – S.43
Any conveyance based on a decree or order conveying interest in Property to Purchaser or any other person acting in his behalf