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Court Dashes FG’s Hope on N2.5tn Stamp Duty Revenue

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  • Court Dashes FG’s Hope on N2.5tn Stamp Duty Revenue

The Court of Appeal sitting in Lagos has dashed the hope of the Federal Government to raise about N2.5tn per annum from stamp duties on bank lodgements with value of N1,000 and above.

Ruling on an appeal filed by Standard Chartered Bank against Kasmal International Services Limited and 22 others, Justice Ibrahim Saulawa and four others justices of the Court of Appeal, Lagos Judicial Division, held that the Stamp Duties Act, 2004 did not impose a duty on Deposit Money Banks to deduct N50 on deposits.

The Central Bank of Nigeria had in a circular issued to the DMBs directed them to deduct N50 for stamp duties on every deposit into a current account of N1,000 and above from January 1, 2016.

The circular, which has since been implemented by the banks, was in spite of the fact that there was a subsisting issue in the court on the subject.

Kasmal International Services Limited, owned by Senator Buruji Kashamu, had on February 17, 2014 obtained the judgement of a Lagos High Court to the effect that that the banks should remit more than N6bn they were supposed to have collected on deposits since the stamp duties became an Act of Parliament in 2004 through the company to the Nigeria Postal Services.

According to Kasmal, NIPOST had appointed it as an agent to collect the stamp duties on its behalf from banks and other financial services firms, adding that the banks should, therefore, remit the money accruing as stamp duty through it to the postal organisation.

However, in the lead judgment, Justice Saulawa held that the Stamp Duties Act imposed no such duty on the banks. In concurring rulings delivered by an Appeal Court panel, Justices Ejembi Eko, Adamu Jauro, Moore Adumein and Nonyerem Okoronkwo agreed in totality with the ruling delivered by Justice Saulawa.

The appellate court set aside the ruling of the lower court delivered by Justice C. J. Aneke on five grounds. The court held that in the first place, NIPOST had no power under the Stamp Duties Act to impose stamp duty on any person and could not have passed the power it never had to any other party.

On one of the grounds, Saulawa said, “It is trite principle that the best way of proving payment of money into a bank account is by the production of a bank teller or an acknowledgment showing on the face thereof that the bank has (indeed) received the payment.

“Thus, contrary to the contention of the appellant, a stamped deposit slip or bank teller evidencing payment of monies into an account of a bank customer does amount to the issuance of a receipt to the said customer.

“However, I would want to agree with the submission of the appellant that in the absence of any express provision to the contrary, (by way of amendment of the Stamp Duties Act) the provisions of the schedule of the Stamp Duties Act, especially item four clearly show that the documents, which evidence receipt of monetary deposits by a bank, such as the appellant, are exempted from the payment of stamp duties.

“As such, there is no obligation thereupon to deduct and remit stamp duties on deposits or transfers, either as erroneously found by the court below, or at all. And I so hold.”

He also posited, “By the provision of section III of the Stamp Duties Act, all duties, fines, penalties and debts due to the government of the federation imposed by the Act shall be recoverable in a summary manner (exclusively) in the name of the Attorney-General of the Federation (or the state as the case may be).

“As such, there is no any specific provision in the said Act conferring power upon the 22nd respondent (NIPOST) to collect the sum of N50 for every N1,000 and above deposited in banks by way of teller deposits or electronic transfers.

“The alleged right or power of the 22nd respondent (NIPOST) to manage and collect stamp duties, being derived from non-existent provision of NIPOST and the Stamp Duties Acts, it goes without saying, that the 22nd respondent lacks the fundamental statutory right or power to manage and collect stamp duties. Consequently, the 22nd respondent cannot possess the locus standi to institute the instant action to enforce non-existent rights thereof.

“The purported amendments to the NIPOST and Stamp Duties Acts to the extent of conferring the 22nd respondent with the power to collect the sum of N50 for every sum of N1,000 and above deposited in banks (by way of teller deposits or electronic funds transfers) are non-existent.”

The appeal court also posited that Kasmal International Services Limited lacked the right to sue for enforcement of the provisions of the NIPOST and Stamp Duties Acts and that such a right could only be vested in NIPOST.

The judgment, which has been kept under wrap by all the parties in the case since it was delivered on April 21 as the banks have continued to charge N50 on deposits into current accounts, was obtained by our correspondents in Abuja on Tuesday.

Investigation showed that members of Technical Committee on Stamp Duty set up by the Federal Government were not aware of the judgement until sometime in July when they gathered for a meeting. It was at the meeting that the CBN informed them that there was a judgement against the collection of the duty.

Apart from the legal tussle, the directive by the CBN to banks to deduct N50 from bank deposits has been very controversial.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Fiscal Federalism: Lagos Demands One Percent in Revenue Allocation Formula

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Sanwo-olu - Investorsking

Lagos State Government on Monday demanded a one percent share in the revenue allocation formula, maintaining that the special status of the State and its prosperity directly or indirectly have multiplying effects on the South-West region and the entire country.

Lagos State Government also proposed that the revenue sharing formula should be 34 percent for Federal Government including one percent for FCT – Abuja, 42 percent for State Governments, 23 percent for Local Governments and one percent for Lagos State (Special Status) as against the current revenue allocation formula, which are 52.68 percent, 26.72 percent and 20.60 percent for Federal Government, 36 state governments and 774 local governments respectively.

The demands were made by Lagos State Governor, Mr. Babajide Sanwo-Olu at the opening of a two-day South-West Zonal Public hearing on the review of revenue allocation formula by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) held on Monday at Lagos Continental Hotel, Victoria Island.

Governor Sanwo-Olu in a memorandum on review of Revenue Allocation Formula he submitted to the RMAFC declared that allocating one percent for Lagos State (Special Status) and allowing the three tiers of government to share 99 percent in a new revenue sharing formula is very straightforward, self-justifying and in no way controversial.

He said the review of the current revenue allocation formula is long overdue, noting that the best way to guarantee national progress and development is by paying attention to sub-national development because the national is a summation and a reflection of the sub-national.

He also reiterated the call for Lagos State to be accorded special status in recognition of its huge financial commitments to infrastructure and provision of basic amenities for the increasing population of its residents, as well as its preeminent contribution to the national coffers.

He said the call, which has been re-echoed at different fora and at various levels and tiers of government, cannot be overemphasized, especially against the backdrop of the current economic situation of the country, the aftermath of the EndSARS protests a year ago, and the devastating effects of the COVID-19 pandemic, for which Lagos has been the national epicenter.

“Our demand is a sharing formula that is just, fair and equitable; reflecting the contribution of stakeholders to the common purse, and also one that enhances the capacity of state and local governments to deliver high-quality services and the full dividends of democracy to the greatest number of our people.

“Lagos State is no doubt the nation’s commercial capital, and population center. The level of funding required to service the State’s social and public infrastructure is so significant that it will be difficult for the State to bear the burden for much longer under the present arrangement.

“I should say that it will actually be unfair to expect the State to bear this heavy burden on its own. It is, therefore, necessary to give due consideration to all the variables that support our advocacy for a Special Status.

“The call for a special status for Lagos is not a selfish proposition; it is in the best interest of the country and all Nigerians, for Lagos which accounts for about 20 percent of the national GDP and about 10 percent of the nation’s population to continue to prosper,” the Governor said.

Justifying the need for Lagos State to be accorded special status, Governor Sanwo-Olu said Lagos is more than just another state in the Nigerian federation, noting that there is no tribe in the country that has no significant stake in Lagos State.

He said: “As the former capital of the country for 77 years (compared to the 30 years that Abuja has been the Federal Capital Territory), Nigeria’s largest metropolis still bears the heavy brunt of being home to all Nigerians; irrespective of age, class, gender, religious affiliation or tribe.

“There are several statistics that show the number of people that comes into Lagos every day, however, there are clear indications that most of these people migrate with the intention to make Lagos their new home and in pursuit of personal dreams due to the opportunities the city-state seemingly possesses, and this portends additional responsibilities on the government.

“Additionally, Lagos still harbors a huge number of federal establishments which could not be moved to Abuja. These include military cantonments and barracks, Police, Customs, Immigration, Civil Defence, Prisons, Road Safety and security/intelligence establishments.

“There are several reasons to justify the call for a special status for Lagos apart from the aforementioned factors and by extension, a review of the Revenue Allocation Sharing Formula.”

Governor Sanwo-Olu also said that it would be unfair for Lagos State to be left alone to bear the burden of the massive destruction experienced by the State during the EndSARS protests hijacked by hoodlums and the COVID-19 pandemic without assistance from the Centre.

“This month marks one year after the massive destruction experienced by the State in the violence that accompanied the hijacking of the EndSARS protests. Public buildings were burnt down, and historical infrastructure was destroyed.

“Although we have put that experience behind us and forged ahead, the reality of this unfortunate incident remains with us; resources that should be committed to other areas of need are now being used for the restoration of these public facilities. It will be totally unfair for Lagos State to be left alone to bear these huge expenses without assistance from the Centre.

“COVID-19 pandemic is another issue that has once again, supported the justification for Lagos to be accorded the privilege of special status. As much as this affects the entire country, it is a fact that the degree of the havoc caused by this virus differs from State to State.

“Lagos was the epicenter for this virus, the same way it was for the Ebola virus some years ago. The management of these unforeseen occurrences comes with huge responsibilities and financial commitments on the part of the State Government,” he said.

Governor Sanwo-Olu commended the Chairman and members of RMAFC for taking a bold step, which he believed will “result in a fundamental alteration of the current revenue sharing formula, in favour of one that is truly fair and equitable, and that takes into full consideration the specific and more pragmatic fiscal contexts of the sub-national governments of the Federation.”

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FG Places 3,964 Nigerians on Watch List, Suspends Passports

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Nigerian passport - Investorsking

No fewer than 3,964 Nigerians are currently on the watch list of the Nigeria Immigration Service.

The names of the affected individuals, it was gathered, have been placed with security agencies at the nation’s international airports where they will be arrested on sight.

According to the 2020 NIS annual report suspect index, 308 persons were placed on the watch list in 2019, 166 in 2020, while 51 persons were stop-listed in two years.

No fewer than 3, 438 passports are also being watch, while 23 are on the exemption list.

The report states, “Suspect index reviews and maintains the list of persons whose entry into Nigeria is prohibited or on whom special instructions are in place with respect to entry and departure from Nigeria. The travel documents are the instruments used to achieve this objective through synergy with other law enforcement agencies and court of competent jurisdiction.”

In a related development, the NIS has revoked 149, 875 stolen or lost passports and uploaded them to Interpol’s Stolen and Lost Travel Documents database via the Web Services for Data Management platform.

Meanwhile, there are indications that the FG may not meet its 2021 revenue projection from NIS services.

Findings show that there might be revenue shortfall from visa; e-PASS, ECOWAS Residence Card, the Combined Expatriate Residence Permit and Aliens Card and other documents issued by the NIS due to the reduced number of foreign visitors and expatriates in the country following COVID-19 travel restrictions.

Immigration sources said the number of Italians, Britons, South Africans, Chinese, Indians, and other Asians, who constitute a large percentage of expatriates in the country, had reduced on account of travel restrictions imposed by their respective countries.

The erstwhile Comptroller-General of Immigration, Muhammad Babandede had said the service recorded a 40 per cent revenue shortfall in 2020 due to the COVID-19 pandemic.

Figures from the NIS showed that in 2018, the immigration service generated N20.3bn from CERPAC; N40.7bn in 2019, and N16.7bn in 2020.

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Envoy Considers Establishment Of Chinese Banks In Nigeria To Boost Economy

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Chinese Ambassador to Nigeria- Investors king

Mr Cui Jianchun, the Chinese Ambassador to Nigeria, says he is in talks with Chinese owned Banks to establish operations in Nigeria.

This, the envoy said, is to boost Nigeria’s economy and expand trade relations between the two nations.

Cui made this known on Tuesday in Abuja while addressing Journalists during the commemoration of the 2021 Chinese Moon Festival and China-Nigeria Cultural week.

According to Cui, the establishment of Chinese Banks in Nigeria will also be one of the key areas of discussion during the China-Nigeria Binational Committee meeting, which he is also pushing for the establishment.

He said that an efficient financial institution was a key driver to achieving a strong economy, one Nigeria can learn from China’s experience.

“Before my departure from Beijing to Abuja, I talked to several banks in China. When you list the World’s 10 big banks, six are in China.

“The Banking sector is very important, because, without money, we cannot build our industries.

“What I am thinking here is best to talk to the governor of Central Bank and how we can allow the Chinese Banks to run office here and now, they are doing the feasibility studies on that.

“I am working hard that in the Bi-national meeting, I hope we can make a big decision and give a big push to let the banking industry and insurance industry because financial integration and institutions are key.

“If you go to China, you will find our banking industry is very powerful, not only for business but the change in the way of life.

“Because of the COVID-19, the Banking Industry is a little hesitant, but I told them Nigeria has a lot of human resources and as long as we work together, we can do big things.

“And that is why it is important to invest in the banking industry, to solve this problem,” Cui said.

Extolling the extant China-Nigeria trade relations, Cui noted that the volume of trade between China and Nigeria is nearly 20 billion US Dollars, with an increase from 2020’s 19.2 billion dollars.

Cui said the Chinese economy is restoring to the normal post-COVID-19 pandemic and both governments are working hard on how to expand imports and exports.

Speaking on the event, Cui said the China’s moon festival is a very important and significant one for China as it symbolises family reunion, national peace and social harmony.

The envoy said the 2021 celebration is also a special one as it coincides with the 50th Anniversary of China-Nigeria’s bilateral relations.

He said that both countries also share Oct. 1 as their National Days.

He said it is also on that note that the Chinese Embassy is honouring 50 Nigerian employees of Chinese Companies in Nigeria for their outstanding performance and contribution to strengthening diplomatic ties.

Dr Ifeoma Anyanwutaku, the Permanent Secretary, Federal Ministry of Information and Culture, also lauded the Nigeria-China relations.

She said the relations had recorded great successes over the past five decades.

“The five decades of co-operation had since witnessed several cultural activities and exchanges in the spheres of arts, music, dance, exhibition, cultural administration, training and capacity building of cultural officers.

“And recently, the development of Cultural Industries centres in Nigeria, among others.

“I must add that China, through the youth-oriented programmes such as the photos competition and similar activities in the past is surely a dependable ally.

“In redirecting the energy and mind of our youth to creative ventures, thereby furthering the Nigerian government’s policy of lifting a hundred million Nigerians out of poverty in the next 10 years”, Anyanwukatu said. (NAN)

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