INTRODUCTION
As part of the broader tax reform agenda aimed at streamlining tax processes, improving revenue mobilization, and promoting efficiency in tax administration in Nigeria, President Bola Ahmed Tinubu on Thursday, 26 June 2025, assented to a suite of tax reform laws[1]. One of such laws, is the Nigeria Tax Administration Act 2025 (the “NTAA”).
Historically, the administration of stamp duties has reflected Nigeria’s federal structure, with States and the Federal Government sharing roles depending on the nature of the instrument and the parties involved. This much was reflected in the provisions of the Stamp Duties Act, CAP S8, LFN 2004 (as amended) (the “SDA”).
However, certain provisions of the NTAA appear to consolidate administrative authority as it relates to the administration of stamp duties in favor of the Federal Government, potentially undermining the role of the State tax authorities.
This briefing note seeks to examine the relevant provisions of the NTAA vis-à-vis the powers of State tax authorities to collect and administer stamp duties.
THE LEGAL LANDSCAPE BEFORE THE NTAA
The Stamp Duties Act
Stamp duty is a tax payable in respect of dutiable instruments. Such dutiable instruments include agreements, contracts, receipts, memoranda of understanding, promissory notes and such other dutiable instruments stipulated in the schedule to the SDA.
The SDA has long served as the principal legislation on the administration of stamp duties in Nigeria. Section 4 of the SDA clearly sets out the responsible tax authorities charged with the duty of administering stamp duties. The SDA adopts a bifurcated approach to the administration of stamp duties. Pursuant to Section 4(1) of the SDA, the Federal Government through the Federal Inland Revenue Service (“FIRS”), is tasked with the authority to impose, charge and collect duties upon instruments specified in the schedule to the SDA which are executed between a company and an individual, group or body of individuals. Conversely, Section 4(2) of the SDA confers on the State governments, through the various State internal revenue services, the authority to collect stamp duties in respect of instruments executed between persons or individuals at such rates to be imposed or charged as may be agreed with the Federal Government. By implication, the collection of stamp duties under the SDA regime was intended to be divided between the State and the Federal Government depending on the parties to the transaction for which the stamp duty is to be paid.
In our view, this stance reinforces the concept of fiscal federalism by guaranteeing that State Governments can access specific sources of internally generated revenue.
THE NEW PARADIGM: NIGERIA TAX ADMINISTRATION ACT 2025
Section 3 of the NTAA: Consolidated Administrative Powers for the Nigeria Revenue Service
Section 3(1)(b)(ii) of the NTAA vests in the Nigeria Revenue Service (the “NRS”)[2] the power to administer stamp duties – without distinguishing between corporate and individual transactions. This marks a significant departure from the Federal-State delineation previously established under the SDA.
Furthermore, Section 3(1)(a) of the NTAA grants the NRS exclusive responsibility to administer taxes on various categories of persons and entities. It is important to note that while Section 3(2)(a) (i-vi) of the NTAA vests the various State tax authorities and that of the Federal Capital Territory with certain powers and functions, the power to collect and administer stamp duties is conspicuously absent from powers conferred on the State tax authorities by the above-referenced provisions of the NTAA.
Section 87 of the NTAA: A Nod to State Autonomy?
A cursory look at Section 87(1) of the NTAA seems to suggest that the powers of the various State tax authorities as it relates to the administration of stamp duties, is preserved under the new fiscal regime. The said Section provides thus:
“Without prejudice to the power of the State Government with respect to the administration of the income tax of individuals, Pay As You Earn, Stamp Duties, there is established for each State, the State Internal Revenue Service (State Service)” (underlining is for emphasis).
This appears to reaffirm State control over certain tax types, including stamp duties. However, when read together with Section 3 of the NTAA, it becomes clear that the NTAA may be contradictory and unclear on the subject. While Section 87 of the NTAA recognizes the State Governments’ powers to administer stamp duties, Section 3 of the NTAA appears to consolidate administrative control of all stamp duties exclusively under the NRS.
WHAT DOES THIS MEAN FOR STATE GOVERNMENT?
1. Revenue Loss and Fiscal Dependency
State Governments derive significant revenue from stamp duties on transactions such as tenancy agreements, land instruments, and contracts executed between individuals. If the NTAA is interpreted to give exclusive control over the administration of stamp duties to the NRS, States may lose access to this revenue stream, increasing their fiscal dependency on Federal allocations.
2. Erosion of Tax Administration Capacity
By stripping State Governments of direct control over the administration of stamp duties, the NTAA could lead to a gradual weakening of the revenue collection agency of States, which may no longer have the incentive or legal authority to build capacity for stamp duty collection and enforcement.
CONCLUSION
While the NTAA, 2025 aims to modernize tax administration, its ambiguous approach to the administration of stamp duties risks undermining State revenue authority and the principle of fiscal federalism. Without clear safeguards, State Governments could lose some financial independence, deepening their reliance on federal allocations. Given that the NTAA is billed to take effect from 1 January 2026, it may be useful to address the issue of responsibility for the collection and administration of stamp duties by way of an amendment to the relevant sections of the NTAA before the effective date.
Please do not treat the foregoing as legal advice as it only represents the public commentary views of the authors. All enquiries on this should please be directed at the authors
Please do not treat the foregoing as legal advice as it only represents the public commentary views of the authors. All enquiries on this should please be directed at the authors.
