Government replaces Stamp Duty with N50 electronic transfer levy

*The Nigerian Government says the Federation will benefit more from the accruing revenue for the new electronic transfer levy

Alexander Davis | ConsumerConnect

In order to enhance more revenue accruing to the government in the mold of VAT, the Federal Government of Nigeria has concluded plans to replace the collection of Stamp Duty with an electronic bank transfer.

The decision was said to have been informed by the Court of Appeal, which outlawed the hitherto controversial Stamp Duty in a recent judgment.

It was learnt the Electronic Money Transfer Levy, which kicked off on January 1, is contained in the new Finance Act 2020, which President Muhammadu Buhari recently signed into law along with the Appropriation Act 2021.

The new law stipulates the payment of N50 levy on every electronic money transfer deposited in any bank or financial institution on any account on the sum of N10,000 or more.

Like the Value-Added Tax (VAT), states of the Federation will benefit more from the accruing revenue at a ratio of 85 percent, while the Federal Government and the Federal Capital Territory (Abuja) take the remaining 15 percent.

The Act also reduces import duty on tractors from 35 to five percent; mass transit vehicles for transport of more than 10 persons and trucks from 35 percent to 10 percent; and reduction of import levy on cars from 30 percent to five percent.

According to experts, this development aimed at redirecting traffic of these vehicles from other ports in West Africa to Nigeria.

The Finance Act 2020 as well makes the cost of donation made in cash or kind to any fund set up by the government in respect of any pandemic or natural disaster to be tax deductible subject to a maximum of 10 percent of assessable profit after other allowable donations.

The Act further provides that compensation for loss of office up to N10m should be exempted from capital gains tax while tax due on excess above N10m is to be deducted by the payer and remitted within the time specified under the PAYE Regulations.

Minimum tax for companies in respect of returns for years of assessments due between January 1, 2020 and 31st Dec, 2021, has also been reduced from 0.5% to 0.25% of gross turnover less investment income.

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