Should Ad Valorem Stamp Duties Apply to Loan Agreements – A Legal Analysis
Sometime in the second half of year 2016, the Federal Inland Revenue Service (“FIRS”) issued a notice titled “Establishment of Stamp Duties Offices in all States of the Federation and the FCT”, which contained a list of instruments, items and applicable stamp duty rates chargeable by the FIRS.
Interestingly, in the list of instruments chargeable with ad valorem duty is an item called “Loan Capital/Agreement” which is chargeable with ad valorem duty of 25 Kobo for every 200 Naira. This terminology and the consequential charge payable has generated significant controversy particularly pertaining to the definition of loan agreement, whether loan agreements fall within the purview of stamp duty law and if they do should ad valorem duty apply to unsecured loan agreements.
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