Nigerian businesses can no longer treat stamp duty as a simple formality. Under the new Nigeria Tax Act, any commercial contract that is not properly stamped may not be accepted in court or during arbitration.

This puts many important business deals worth billions of naira at risk.

According to BusinessDay, tax consultant Olamide Sulaiman described the change as a major shift in how businesses must comply with the law.

“Non-compliance does more than just cost money,” he said. “It can make key documents invalid and unusable in legal disputes.”

The new law is stricter than the old Stamp Duties Act. Section 126 of the NTA says that unstamped documents cannot be used as evidence in court or arbitration (except in criminal cases). There are also penalties for not stamping documents on time: a 10% fine on the unpaid duty plus interest based on the Central Bank’s rate. Some documents now attract a flat fee of N1,000.

Tax advisor and lawyer Muhammad Omotosho explained that many businesses wrongly believe certain agreements, like Share Purchase Agreements (SPAs), are exempt from stamp duty.

“That belief is no longer correct,” he said. He referred to a Tax Appeal Tribunal decision in the Oando v. FIRS case, which made it clear that only documents that actually transfer ownership of shares or property may be exempt.

For big transactions like mergers, acquisitions, and share sales, stamp duty is now 1.5% of the value. This has become a major source of revenue for the government, with collections above N1 trillion yearly.

The new law also reclassifies the Electronic Money Transfer Levy (EMTL) as stamp duty. Banks now charge N50 on transfers of N10,000 and above (paid by the sender), though salary payments and same-bank transfers are exempt.

Another important change: authorities now have six years (instead of five) to demand unpaid stamp duties. In cases of deliberate wrongdoing, there is no time limit.

Sulaiman advised businesses: “Stamping should no longer be an afterthought. It must now be part of proper risk management and done correctly from the beginning.”

What businesses should do now:
– Ensure all contracts, especially share purchase agreements, property deals, and high-value transactions, are properly stamped.
– Legal and finance teams must treat stamp duty as a key part of every deal.
– Investors and lenders should check stamping status during due diligence.