The Special Adviser to the Executive Chairman of the Lagos State Internal Revenue Service, Tokunbo Akande, has clarified the misunderstanding about stamp duty as he maintained that it is a revenue stamp and not a postage stamp.
The LIRC chief made this known while featuring as a guest on a Channels Television programme: “The Tax Talk.”
Akande said contrary to public opinion, stamps are not just for courier services as it is meant to certify the underlying transaction between two entities, whether they are corporate entities or individuals.
Thus, the framework for stamp duty is to verify the documents for underlying transactions and ensure that they are admissible in court in case any disputes arise.
Akande noted: “It’s interesting to note that stamp duty, a tax law that dates back to 1939, is still in effect today.
“Although it was reenacted in 2004 and has been updated over time through the Finance Act, the basic premise remains the same.
“Stamp duty places the responsibility on those involved in certain transactions to provide documentation that explains the details of the transaction.
“For example, if someone purchases an item from another person, a receipt is given to show the transaction.
“This receipt must be stamped to be considered admissible evidence in court in case any disputes arise.
“In the past, the postal stamp was used to denote the stamp duty.”
Akande, who noted that Stamp Duty has contributed significantly to revenue generation in Lagos State, as the state has generated over N5 billion from stamp duty over the past few years, said the agency believes there is still room for improvement.
While stating that the agency is considering the introduction of revenue stamps for wholesalers and distributors for receipts over N10,000 in the state, he noted: “This approach was previously utilised in the 1970s, and we are eager to revitalise it.
“We are fully committed to engagement and process improvement.”
He said the agency has taken the step of digitising its stamp duty operation by transitioning from manual to electronic processes.
According to Akande: “The Joint Tax Board, which oversees all Internal Revenue Services, the Federal Inland Revenue Service, Customs, Immigration and other related bodies, has been at the forefront of promoting awareness about stamp duty in general.
“LIRS has also made significant efforts in this area by holding town hall meetings, issuing public notices and guidance notes, and engaging with professional bodies.
“However, despite these efforts, the message has not been fully received.
“It is important to note that the law requires that all transactions between two entities must be stamped, and even items such as cheques have a small stamp on them.
“This is because they may be admissible in court.
“Therefore, it is your responsibility to ensure that any documents related to transactions above a certain level of expenses are properly stamped, as failure to do so renders them as ordinary paper.”
Akande said the LIRS has expanded its presence across the state, with offices conveniently located to better serve taxpayers as its officials are proud to offer assistance with legal proceedings and have desks located in all the courts of Lagos.
He added: “Our team of experts ensures that all necessary documents are properly stamped and verified by the commissioner for stamp duty.
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“We take record-keeping seriously as it helps to ensure the authenticity of all documents that pass through our hands.
“Proper stamping of documents is essential, whether you’re borrowing money from a bank or renting a property.
“Failure to do so could render them inadmissible in court.
“We are here to help certify your documents and ensure they have the necessary stamps to make them legally binding.”