Taxes are paid on written and electronic documents, such as agreements, contracts, receipts, etc., relating to an act performed or required to be performed in Nigeria. This type of tax known as Stamp Duty is charged at either an ad valorem or flat rate depending on the nature of the document. In this article, we’d explain how stamp duty charges in Nigeria are calculated and other relevant information on stamp duties in Nigeria.
How to calculate stamp duty charges in Nigeria would be discussed below:
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What is Stamp Duty?
Stamp duties are a type of tax that is imposed on written and electronic instruments relating to an act performed or required to be performed in Nigeria. The Stamp Duties Act (SDA), Cap 8, Laws of the Federation of Nigeria 2004 as amended, is the statutory law governing stamp duties in Nigeria.
According to the Stamp Duties Act, all instruments relating to transactions to be performed in Nigeria (whether or not executed in Nigeria) are subject to stamp duty, except those specifically exempted under the SDA.
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How to Calculate Stamp Duty Charges in Nigeria
The Stamp Duties Act provides that stamp duty charges may be levied at a fixed flat rate or ad valorem rate depending on the type or nature of the instrument. Ad valorem rate connotes “according to value”, therefore, an ad valorem rate is based on the value of the transaction.
To help you understand how to calculate stamp duty charges, we’d provide two tables, one indicating dutiable instruments charged at a fixed flat rate, and the other would show dutiable instruments that are charged at an ad valorem rate.
Below is a table indicating dutiable instruments charged at a fixed flat rate and the applicable stamp duty rate as provided by the Stamp Duties Act:
| Type of Instrument/Document | Type of Applicable Stamp Duty Charge | Stamp Duty Rate |
| Admission as a barrister or solicitor | Flat | N50 |
| Affidavit, Affirmation, and Statutory Declaration | Flat | 45 Kobo |
| Agreement under hand | Flat | 15 Kobo |
| Agreement under seal | Flat | N3 |
| Appointment of trustee | Flat | 50 Kobo |
| Charter party agreement | Flat | 9 Kobo |
| Contract (Except other contracts specifically charged with stamp duty in the SDA) | Flat | 15 Kobo |
| Deed of any kind not described in the schedule to the Act | Flat | N3 |
| Power of attorney
Declaration of any use of trust |
Flat Flat |
3 Kobo
N3 |
Below is a table indicating dutiable instruments charged at an ad valorem rate and the applicable stamp duty rate as provided by the Stamp Duties Act:
| Type of Instrument/Document | Type of Applicable Stamp Duty Charge | Stamp Duty Rate |
| Appraisement or valuation of property | Ad valorem | 1.50% |
| Assignment by way of security | Ad valorem | 0.38% |
| Assignment upon a sale or otherwise | Ad valorem | 1.50% |
| Bill of sale | Ad valorem | 1.50% |
| Bond | Ad valorem | 0.38% |
| Contract Note | Ad valorem | 0.08% |
| Conveyance or transfer by way of security | Ad valorem | 0.375% |
| Conveyance or transfer on sale of any property | Ad valorem | 1.50% |
| Debenture | Ad valorem | 0.375% |
| Lease | Ad valorem | 0.78% if lease period is not more than 7 years
3% if lease period is between 7 and 21 years 6% if lease period is over 21 years |
| Loan capital | Ad valorem | 0.125% |
| Marketable securities | Ad valorem | 2.25% |
| Mortgage | Ad valorem | 0.38% |
| Increase in share capital | Ad valorem | 0.75% |
| Insurance | Ad valorem | 0.08% |
- What Parties Are Responsible for Stamping Dutiable Instruments?
The Stamp Duties Act does not expressly indicate the party required to ensure a dutiable instrument is stamped in all cases. However, there are certain documents that the SDA expressly mentions the party is liable to a penalty for not stamping the document(s).
Below is a table showing various documents and the parties obligated to stamp them as provided by the SDA:
| Type of Document | Party Responsible for Stamp |
| Lease | Lessee |
| Settlement | Settlor |
| Conveyance on Sale | Vendee or transferee |
| Mortgage bond, debenture, covenant and warrant of attorney to confess and enter up judgement | The mortgagee or obligee in the case of a transfer or re-conveyance, the transferee, assignee or disposee or the person redeeming the security |
| Bond, Covenant or Instrument of any kind whatsoever | The Obligee, Covenantee or the person taking the security |
| Conveyance or transfers operating as voluntary dispositions inter-vivos | Grantor or transferor |
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What is the Penalty for Late Stamping?
When dutiable instruments are not stamped within the time stipulated by the Stamp Duties Act due to failure to pay stamp duties, an offence is committed. Below is a table showing the penalty and interest for late stamping:
| Penalty | Interest | |
| Where stamp duty is not more than N20 | N20 | |
| Where stamp duty is more than N20 | N20 | 10% interest per annum from the day of first execution up to the unpaid duty. After 10 years, once cumulative interest is 100% of the unpaid duty, no further interest is charged |
There are other penalties for other acts of non-compliance as provided by the Stamp Duties Act. When companies execute instruments without complying with the guidelines provided in the SDA, there is a risk the FIRS may apply according to the penalty provision of the Federal Inland Revenue Service Establishment Act, which is a 10% penalty and interest at the CBN minimum rediscount rate plus a spread as announced by the Finance Minister.
Aside from the penalties discussed above, failure to stamp dutiable instruments intended to be used in civil proceedings renders such instruments non-admissible as evidence.
- What Are the Modes of Stamping Instruments?
Dutiable instruments mentioned above can be stamped in the following ways:
- Employing a die impressed on an instrument
- Affixing printed adhesive stamps issued by the Nigerian Postal Service
- Direct electronic printing or impression on the instrument
- Electronic tagging
- Issuance of stamp duties certificate
- Any other form of acknowledgement of payment for Stamp duties adopted by the FIRS
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What Agency is Responsible for Collecting Stamp Duties in Nigeria?
The FIRS is responsible for collecting stamp duties on instruments relating to transactions or matters executed between corporate bodies, or between a corporate body and an individual, group or body of individuals.
When instruments are executed between individuals, relevant state tax authorities are responsible for the collection of stamp duties.