Nigeria Betting On Stamp Duty Collection To Become The Next Oil Revenue

After 20 years of Nigeria not prioritising collection of stamp duty charges, the administration of President Muhammadu Buhari had been aggressively pushing for it as it looks for a solution to its revenue problem amidst an economic downturn. The government had placed stamp duty charges on its revenue list as it looks within to expand its revenue generation.

According to the Secretary to the Government of the Federation (SGF), Boss Mustapha, the revenue potential of stamp duty is enormous, and the government intends to milk it for all its worth, AllNews understands. Mustapha had revealed the crucial part stamp duty will be playing in government's revenue during the inauguration of the inter-ministerial committee on audit and recovery of stamp duty, which will be chaired by the office of the attorney-general of the federation (AGF).

"The government has recognized the fact that for meaningful development to be achieved, it has to look inwards to use every available means to shore up its revenue-generating capacity. For too long the country has depended on oil as the main cash cow of the economy even though it is richly endowed with other viable revenue yielding sources.

“In the face of dwindling oil revenue, and the global shift away from oil-dependent technological products, it is even more compelling now to begin to think out of the box in order to safeguard the future of our country," Mustapha told the inter-ministerial committee on audit and recovery of stamp duty.

Stamp Duty Collection Can Produce Oil Money

Mustapha said the projected expenses of the government is below the projected revenue, and one of the ways the government is looking to reduce the gap is through proper implementation of the stamp duty charge. He said the collection of stamp duty had been ignored for about 20 years, so its time for various government agencies to remit the earnings from it.

During his discussion with the inter-ministerial committee, Mustapha said revenue from stamp duties from January 2016 to date that is yet to be remitted by Ministries, Departments and Agencies (MDAs), money deposit banks (MDBs) and Nigerian Inter-Bank Settlement System PLC (NIBSS), amongst others should be audited and remitted.

He said the stamp duty collection could earn Nigeria N1 trillion annually, and become the second-highest revenue source - behind oil revenue - for the government, "There is an assurance that the collection from stamp duty will be second to oil revenue, as it has the potential to yield up to a trillion naira revenue annually if properly harnessed.

“The inter-ministerial audit and recover committee, in essence, is therefore expected to judiciously undertake an audit and recover, on behalf of the government, all stamp duties charged from January 2016 to date but yet to be remitted by the relevant ministries, departments and agencies (MDAs), money deposit banks (MDBs) and Nigerian Inter-Bank Settlement System PLC (NIBSS), amongst others.”

Nigeria Revenue Suffering, Economy Facing Recession

The decision of the government to revive the collection of stamp duty charges is caused by declining revenue. Although, pre-COVID-19, the Minister of Finance, Zainab Ahmed, had insisted that Nigeria doesn't have a revenue problem - despite the government desperately seeking new sources of revenue by increasing VAT, and initiating the Finance Act - the coronavirus pandemic had further affected the revenue sources currently available.

Oil revenue is down, and the measures adopted to curb the spread of the virus had affected businesses that had to shutdown for about two months. This consequence of the pandemic is pushing Nigeria towards recession, with major foreign inflow declining sharply. So all of these have mandated the need for government to further rethink its revenue sources and ensure proper implementation.

Although, the government had been warned by the International Monetary Fund to resist the urge to implement new tax measures, as it could further affect the businesses already suffering from the negative impact of the COVID-19 pandemic.