Deposit money banks have resolved to reverse the stamp duty charge on savings accounts which were collected contrary to the direction of the regulator.
In a text message to customers, one of the tier 1 banks apologised to its clients against the inconvenience caused by such action.
Part of the text message reads: “We are pleased to announce that stamp duty charges on savings accounts will be reversed. We apologise for the inconvenience”.
The Central Bank had through a circular issued on January 15, 2016 directed the lenders to deduct N50 stamp duty on each deposit made into current accounts with a value of N1,000 and above in order to boost government’s revenue drive and in compliance with Stamp Duties Act, 2004. The CBN however, clearly exempted savings accounts from the deduction of stamp duty.
Investigation revealed that banks are charging N50 on both current and savings accounts. They also deduct stamp duty on the depositing end of the transaction which is contrary to CBN’s directive of receiving end.
“It is wrong to charge the N50 stamp duty on savings account as this is specifically exempted or against a depositor’s balance rather than the recipient of funds.
The first step to take should be to formally complain to the bank as this may have been done in error in which case the charges have to be reversed but if it is confirmed to deliberate then the issue should be escalated to the CBN and NIPOST. If still unresolved then it should be challenged legally through the court system”, Taiwo Oyedele, partner/head of tax, PWC, had said in an emailed response.
Until now, banks were still charging N50 per N1,000 and above lodgement by depositors even after the ruling of the Court of Appeal, Lagos Judicial Division which held that the Stamp Duties Act, 2004 did not impose a duty on Deposit Money Banks to deduct N50 on deposits.
Oyedele said “It is expected that banks will stop charging the stamp duties on deposits on the basis of the Appeal Court judgement. However, it may be premature to start talking about refund until final determination of the dispute by the Supreme Court”.
He said in an email response to BusinessDay that where the funds have been remitted to government and already shared, it will be difficult to get a refund given the current dire financial situation facing government at all levels.
Also, where the funds have been remitted to government and already shared, it will be difficult to get a refund given the current dire financial situation facing government at all levels.
Impact on government revenue would be minimal given the low revenue collectible from the tax.