Following the legal battle of the Value Added Tax, VAT, ongoing in some states across the country, a tax expert has advocated for review and overhauling of the Stamp Duty Act to meet the current realities in the country.
VAT is a tax imposed on the supply of goods and services. Under Nigerian law, the tax is charged at 7.5% of the value of the taxable goods and services.
iBrandTV gathered that VAT contributes significantly to the nation’s total revenue generated by the government, accounting for 16.2 per cent of the Gross Domestic Product (GDP) as of 2019.
Most states depend on funding from the Federal Allocation Account Committee (FAAC) due to their poor Internally Generated Revenue (IGR).
Lagos and Rivers states contribute over 70 per cent of the VAT collectables in the country, have decided to enact a law that will empower them and not FG, to collect VAT in their states.
But, Mr. Albert Folorunsho, a tax expert in a paper presented at the 148th Meeting of the Joint Tax Board (JTB) in Abuja on Thursday, stated that the stamp duty act was enacted in 1939, and since then, no major amendments had taken place.
The paper was titled “Achieving Effective and Efficient Administration of Stamp Duties and Other Related Taxes for enhanced revenue generation in Nigeria”.
He said that only slight amendments were made in Finance Act 2019 and 2020.
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Folorunsho said that stamp duty act had been facing a lot of challenges in the implementation because provisions did not communicate certainty like party responsible to pay and payment timelines.
According to him, other challenges in the implementation are rates and penalties that are not well spelt out in the act.
He stated that training for revenue officers on stamp duty administration had been arbitrary and inadequate.
Folorunsho also identified lack of data to track compliance as another hitch for in implementation of the act.
He said overhauling the stamp duty act was necessary to align with the current realities and best global practices.
The tax expert said that doing so would ensure the clear identification of responsible parties or collection agents.
Folorunsho said that if the stamp duty was reviewed, it would address emerging transactions and restrict the dutiable instruments to land and security transactions.
In his remarks, the Chairman of JTB, Mr Mohammed Nami, tasked revenue authorities in the 36 states and FCT to step up in generating more revenue to their respective states.
Nami said with the Gross Domestic Product (GDP) growth profile of the country looking good again, the tax authorities must ride on the wave of economic prosperity and take advantage of the opportunities that present themselves.
“We look forward to an enlightening discourse on the practical, proactive steps to take towards ensuring that the statutory bodies charged with the administration of these taxes do so in more effective and efficient ways to ensure enhanced revenue generation from these revenue sources.
‘I want to also emphasise that the responsibility for generating revenue for the state and the nation is a unique opportunity, and call to national service.
“While heeding this call, one must be selfless, above board, and have national interest above all other interests at heart.
“Our calling as revenue administrators should be taken with all sense of responsibility, and I must say that I am proud of the assembly of eminent statesmen and women present in this hall.
“I believe that together, we can indeed chart a positive, inclusive, and sustainable future for revenue administration for our dear nation Nigeria,” he said.