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FG Defies Court as Banks Continue Stamp Duty Collection

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  • FG Defies Court as Banks Continue Stamp Duty Collection

The Federal Government and its agencies have continued to defy the ruling of the Court of Appeal that the deduction of stamp duty on bank deposits is illegal.

Investigation by our correspondent showed that the Technical Committee on Stamp Duty had advised the Central Bank of Nigeria to issue a circular to the banks to stop collecting stamp duty of N50 on deposits into current accounts with value of N1,000 and above.

Although the court ruling was given on April 21, investigation showed that the apex bank had yet to issue the circular. The duty is projected to yield N2.5tn to the Federal Government per annum.

Some bankers, who spoke to our correspondents on the condition of anonymity, said they had yet to get any circular from the CBN to stop the collection.

The spokesperson for the CBN, Mr. Isaac Okoroafor, told our correspondent on the telephone on Thursday that the apex bank had nothing to do with the stamp duty.

He asked our correspondent to refer every question on the subject to the Nigerian Postal Service.

The spokesperson for NIPOST, Hajiya Simbiat Lawal, was indisposed when our correspondent called her on Thursday, but she had earlier said if there was a court ruling, the organisation, as a law abiding entity, would abide by the decision of the court.

The CBN had in a January circular issued to the Deposit Money Banks in the country directed them to deduct N50 for stamp duty on every deposit in a current account amounting to N1,000 and above beginning 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 court on the subject.

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 Duty Act, 2004 did not impose a duty on the banks to deduct N50 on deposits.

Kasmal International Services Limited, which belongs to Senator Buruji Kashamu, had on February 17, 2014 obtained the judgement of a Lagos High Court against the banks to the effect that that they should remit more than N6bn they were supposed to have collected on deposits since the Stamp Duty became an Act of Parliament in 2004 through it to NIPOST.

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

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

The appeal court set aside the ruling of the lower court delivered by justice C. J. Aneke on five grounds.

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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Gold

Gold Prices Rise as Soft Dollar Supports Safe-haven Appeal

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gold bars - Investors King

Gold prices firmed on Monday, propped up by a subdued dollar and slight retreat in the U.S. Treasury yields, with investors gearing up for a week of speeches from U.S. Federal Reserve policymakers for cues on the central bank’s rate hike path.

Spot gold was up 0.5% at $1,759.06 per ounce, as of 0400 GMT, while U.S. gold futures were up 0.4% at $1,759.00.

While the dollar index softened, the benchmark 10-year Treasury yields eased after hitting their highest since early-July. A weaker dollar offered support to gold prices, making bullion cheaper for holders of other currencies.

“Gold is still looking slightly precarious where it is right now, and it’s probably bouncing off key technical level around $1,750,” IG Market analyst Kyle Rodda said.

“Gold remains an yield story and that yield story is very much tied back to the tapering story.”

A slew of Fed officials are due to speak this week including Chairman Jerome Powell, who will testify this week before Congress on the central bank’s policy response to the pandemic.

“There’ll be a lot of questions being put to Fed speakers about what the dot plots implied last week and weather there is higher risk of heightened inflation going forward and that rate hikes could be coming in the first half of 2022,” Rodda added.

A pair of Federal Reserve policymakers said on Friday they felt the U.S. economy is already in good enough shape for the central bank to begin to withdraw support for the economy.

Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

Investors also kept a close watch on developments in debt-laden property giant China Evergrande saga as the firm missed a payment on offshore bonds last week, with further payment due this week.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.1% to 993.52 tonnes on Friday from 992.65 tonnes in the prior session.

Silver rose 0.9% to $22.61 per ounce.

Platinum climbed 1.3% to $994.91, while palladium gained 0.7% to $1,985.32.

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Crude Oil

Brent Crude Oil Near $80 Per Barrel Amid Supply Constraints

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Brent crude oil - Investors King

Oil prices rose for a fifth straight day on Monday with Brent heading for $80 amid supply concerns as parts of the world sees demand pick up with the easing of pandemic conditions.

Brent crude was up $1.14 or 1.5% at $79.23 a barrel by 0208 GMT, having risen a third consecutive week through Friday. U.S. Oil added $1.11 or 1.5% to $75.09, its highest since July, after rising for a fifth straight week last week.

“Supply tightness continues to draw on inventories across all regions,” ANZ Research said in a note.

Rising gas prices as also helping drive oil higher as the liquid becomes relatively cheaper for power generation, ANZ analysts said in the note.

Caught short by the demand rebound, members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, have had difficulty raising output as under-investment or maintenance delays persist from the pandemic.

China’s first public sale of state oil reserves has barely acted to cap gains as PetroChina and Hengli Petrochemical bought four cargoes totalling about 4.43 million barrels.

India’s oil imports hit a three-month peak in August, rebounding from nearly one-year lows reached in July, as refiners in the second-biggest importer of crude stocked up in anticipation of higher demand.

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Crude Oil

Oil Holds Near Highest Since 2018 With Global Markets Tightening

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Crude Oil - Investors King

Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.

Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.

China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.

Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.

“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.

At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.

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