Wednesday, April 13, 2016

GUEST WRITER SERIES: (Nigeria: The Joke is on Us...and We Are All to Blame! Part 2)

Mbachu Obinna.


More recently the CBN introduced 2 different charges on certain bank transactions. The first called Accounts Maintenance Charge is a straightforward rebranding of a spurious charge of COT that was due to be phased out this year 2016. And when the awaited moment came, they did as they promised, the COT charge was indeed phased out but then an interesting thing happened. Voila! A new charge was introduced called, yes you guessed it - Accounts Maintenance Charge and it works exactly how COT used to work. It just has a different name so you can’t say that the CBN did not make good on its promise to end COT charges!

The second is a little less straightforward. In fact we have to go back to 2004. In the Stamp Duties Act of 2004, section 89(2) states: “every receipt given by any person in acknowledgement of goods purchased or services rendered should be denoted by an adhesive postage stamp worth N50 issued by NIPOST.”

Now for how this section of the Act comes into this story, we would have to endure a bit of background history.

School of Banking Honours (SBH) a private Institution with offices in Lagos on 74 Ogunnusi road at Ojodu Berger came up with this idea sometime around 2012 of a N50 stamping of bank transaction receipts in form of electronic money transfers and manual banking tellers with values of N1000 and above.

This incredible idea was then sold to the Federal government of the time under Goodluck Jonathan as an avenue for increased FG revenue.

SBH then obtained an MSA (Master Services Agent Agreement) from NIPOST to act as a paid agent in the collection of this revenue. All that was needed at this point was for the FG to mandate the CBN to issue a compliance circular to all commercial banks. This circular did not come until January 2016 as we know it.

On Oct 25, 2013 another entity emerged; KASMAL International Services Limited (Owned by Prince Buruji Kashamu) obtained a court order delivered by Justice Chukwujekwu Aneke mandating 22 commercial banks to remit to NIPOST via KASMAL international services Ltd, N50 as stamp duty on every eligible transaction. This judgement was based on (1.) The stamp duties act of 2004 (2.) the NIPOST act of 2004 and (3.) Federal Government of Nigeria Financial Regulations of 2009.
The 22 commercial banks have appealed this decision at the Federal Court of Appeal with a number of arguments, one of which is that the bank transactions relating to electronic funds transfer on behalf of its customers and teller deposits into its customers’ accounts cannot be described as receipts within the provisions of section 89 of the Stamp Duties Act.

Let us collectively attempt to comprehend the section of the act on which this charade hinges, as stated in the first paragraph of this piece. Thankfully, section 89 of the Stamp Duties Act is in clear enough English and we will not be needing the services of a lawyer to interpret it.

Nothing in this section remotely suggests charges on electronic money transfers and teller deposits. There is no mention of a minimum chargeable sum of N1000. It simply states that receipts for goods and services purchased and rendered must be duly stamped with an adhesive stamp worth N50, suggesting to us that the receipt in consideration here is a physical document—you cannot put an adhesive stamp on an e-receipt. When you deposit money into an account over the counter or make an electronic money transfer, it is just that—a transfer. It becomes a payment only if a goods and/or services are exchanged in which case it can be argued that the receipt for this transaction must be duly stamped and even then, only if a paper receipt is issued. In which case a stamp will be bought from NIPOST or an accredited stamp reseller, for this purpose. And it will have nothing, absolutely nothing to do with commercial banks as a whole. But somehow a group of very clever people together with a Federal High court Justice decided to simply assume this charge on all deposit transactions. This, I find to be incredible, absolutely incredible!

If you reading this and at this point you are not yet incensed, please accept my invitation. I hereby invite you to share in my anger.

No comments: