The Accountant General of the Federation, Dr. Shamseldeen Ogunjimi, has issued a directive ordering all ministries, departments, and agencies (MDAs) of the federal government to immediately halt the deduction of 1% stamp duty from payments made to contractors, vendors, suppliers, and service providers.
Circular Details
The directive was communicated through a circular signed by Dr. Ogunjimi, emphasizing the need to ensure strict compliance with the provisions of the Nigeria Tax Act 2025 and to prevent the misapplication of statutory deductions.
According to the circular, the new tax law stipulates that stamp duty is imposed on chargeable instruments, not on payment transactions. As a result, MDAs are now required to apply stamp duty only to instruments and transactions expressly chargeable under the provisions and schedules of the Act.
Preservation of Previous Deductions
The circular also notes that stamp duty validly deducted before the commencement of the new tax law remains preserved under the savings provisions of the Act.
It further clarifies that the Nigeria Tax Act, effective from January 1, 2026, governs the administration of stamp duty. MDAs are advised that, except for contracts awarded before January 1, 2026, the stamp duty provisions under the new Tax Act 2025 shall apply.
Key Provisions of the Nigeria Tax Act 2025
Under the new Nigeria Tax Act 2025, any agreement first executed in Nigeria, or relating to property or actions performed in Nigeria, that is valued at up to N1,000,000 must pay a fixed stamp duty of N1,000.
The Act also covers the transfer of mineral assets, including rights or interests in oil, gas, solid minerals, and mining or exploration licenses or leases, with a rate of 2% of the value of the transfer. Additionally, a 0.75% rate applies on authorized share capital at incorporation or registration of new shares.
For electronic bank transfers or receipts, a flat N50 fee applies on transfers of up to N10,000 and above. This fee is now to be paid solely by the sender, ensuring the receiver receives the full amount.
