Nigeria revises threshold for new stamp duty on electronic payments upwards

STAMP DUTY red Rubber Stamp over a white background.

NIGERIA – The Federal Government of Nigeria has reviewed the N50 stamp duty charges on electronic payments in the country after receiving backlash from Nigerians and industry stakeholders.

A Financial Bill currently before the National Assembly stated the N50 charge would be imposed on transactions above N10,000 – a rise from the previous N1,000 that had taken effect across the country in September.

The new bill aims to repeal a provision of the Stamp Duty Act 2014, which had a threshold for receipts chargeable with stamp duty as N4 and above and will also exempt bank transfers between two accounts owned by the same person or Organisation.

The Central Bank of Nigeria in a circular to deposit money banks, processors and switches on September 17, 2019 authorized banks to unbundle merchant settlement amounts and charge applicable taxes and duties on individual transactions.

Banks were asked to charge a duty of N50 for services rendered in respect of electronic transfers and teller deposits from N1,000 and above on behalf of the Nigeria Postal Service.

The directive quickly became unpopular and was condemned by mobile money agents, retailers, merchants and bank customers who said it would discourage the cashless transaction and financial inclusion agenda of the Federal Government.

While some merchants had started charging customer N50, others had stopped using the terminals due to the refusal of customers to pay the extra charges.

Analysts at PricewaterhouseCoopers, in their assessment of the review, said the increased threshold would benefit small businesses that had started transferring the N50 duty to their customers.

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