…Exempts Stamp Duty on Same Owner Account Transfer
Any bank transfer between two accounts owned by the same person or organisation will no longer be subjected to stamp duty, the federal government has said.
Last month, President Muhammadu Buhari signed the Finance Act 2019, approving the review of stamp duty charged on financial transactions done by bank customers.
Before it was signed, banks charged N50 on transactions above N1,000, but after it was signed, the amount became effective on payments more than N10,000.
At the Udo Udoma and Belo Osagie Second Private Equity Summit: Fundraising and Deal Academy held in Lagos recently, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, highlighted some of the benefits of the Finance Act.
According to her, in order to make things better for citizens, federal government exempted stamp duty from same owner account transfer and also eliminated tax costs from genuine business reorganisation within a group, especially including specific exemption for value added tax (VAT) and Capital Gains Tax (CGT) on the transactions, which were previously dealt with informally.
Speaking further at the event themed Drivers, Disruptors and Unlocking Value, the Minister said the administration of President Muhammadu Buhari removed the payment of advance income tax on interim dividends. It was gathered that before now, every company operating in the country liable to tax under the Companies Income Tax Act (CITA) was required to make an advance payment of its Company Income Tax (CIT) prior to paying interim dividends to shareholders.
Mrs Ahmed, at the summit, said explained that government came up with this policy to make the nation’s capital market attractive to investors.
According to an analysis by KPMG, “This requirement is generally regarded by taxpayers as moribund, though it was not deleted from the law, after Nigeria transitioned in 1993 from the provisional-tax-cum-government-assessment era to the self-assessment regime.
“It was in the same year that the scope of transactions liable to WHT, which was limited at the time to interest, royalty, rent and dividend payment, was significantly expanded to cover payments relating to active business transactions.
“Consequently, the general view was that the WHT deducted from companies’ income from business transactions, which is an advance payment of their CIT, made the requirement to pay advance CIT prior to paying interim dividend redundant.”
The reputable consulting firm further stated that, “The repeal of this provision as contained in the Finance Act is, therefore, a welcome development to many taxpayers.”
“However, in deleting the provision, the WHT exemption on dividends in specie has also been removed. Taxpayers who would typically pay dividends in the form of scrip issue are therefore encouraged to take note of this significant change.”
