FG asks banks to deduct stamp duty charges on mortgages

The Federal Government has authorised Deposit Money Banks to immediately begin deducting the 0.375 percent stamp duty levy on all mortgage-backed loans and bonds.

Mortgage-backed loans are loans made by financial institutions to individuals or companies to purchase a property and repay the loan over time with interest, whereas bonds are debt instruments issued by governments, municipalities, corporations, or other entities to obtain cash.

The new directive was included in a statement delivered to customers by banks, as directed by the Federal Inland Revenue Service.

It shows that the government is broadening the scope of stamp duty charges to encompass overseas transactions and loans, as well as ordinary bank transfers, as part of the tax authority’s efforts to improve fiscal performance.

Recall that banks were also required in January to deduct stamp duty on old overseas transactions from January 2021 to December 2023 by January 31, 2024.

Previously, the electronic money transfer levy applied exclusively to accounts that received electronic deposits of N10,000 or more, or its equivalent.

In an electronic message issued to its customers on Thursday informing them of the deduction, Access Bank wrote, “We would like to inform you that the Federal Inland Revenue Service has directed all Nigerian banks to implement stamp duty on certain transactions that require duty payments, such as contracts and legal mortgages.

“In compliance with this directive, we have taken measures to streamline the process to make transactions more convenient for you.

“To this end, a stamp duty charge of 0.375 percent will be applied to loans backed by legal mortgages, shares, debentures, or bonds. The charge will be applied to the value of the legal mortgage, shares, debts, or bonds and remitted to the Federal Inland Revenue Services.”

The notice also stated that the directive had no effect on already approved loans, which would continue to be returned in full in accordance with the agreed-upon terms.

“However, all previously approved loans will remain unchanged and should be repaid in full as per the agreed terms and conditions. We are committed to providing you with exceptional service,” the notice stated.