Court of Appeal Affirms EFCC’s Power to Investigate Tax Evasion in Nigeria. Understanding Sections 128–139 of the Nigeria Tax Act, 2025: Modernizing Stamp Duties on Instruments in Nigeria
Introduction
The enactment of the Nigeria Tax Act, 2025 (NTA 2025) represents one of the most comprehensive reforms in Nigeria’s fiscal history. By consolidating several tax laws into a single legal framework, the Act seeks to modernize tax administration, improve efficiency, and strengthen revenue generation across all tiers of government.
A key component of this reform is found in Chapter Five (Sections 124–139), which governs Duties on Instruments, commonly referred to as stamp duties. Sections 128 to 139 of the Act redefine the scope of chargeable instruments, clarify terminologies, and expand the regime to include contemporary financial, property, and corporate instruments. These provisions collectively strengthen fiscal accountability and align Nigeria’s tax system with modern commercial realities.
class="wp-block-heading">Overview of Duties on Instruments
Duties on instruments, or stamp duties, are levies imposed on legal documents that evidence financial or commercial transactions. The purpose of these duties is twofold: first, to validate the authenticity and enforceability of such instruments; and second, to ensure that government captures revenue from the documentation of economic transactions.
The NTA 2025 extends these duties to include electronic and digital instruments, thereby closing gaps that previously allowed electronic financial and property transfers to escape duty obligations. This represents a deliberate step towards integrating taxation with Nigeria’s growing digital economy.
Section 128 – The Meaning of “Bill of Exchange”
Section 128 provides an expansive definition of a bill of exchange. It includes drafts, orders, cheques, and letters of credit, as well as any written or electronic document entitling a person to payment by another. The only exclusion is bank notes, which are already governed by monetary legislation under the Central Bank of Nigeria (CBN).
The section also defines a bill of exchange payable on demand to cover orders for payment by promissory note, payments made out of specific funds (even if conditional), and recurring payment instructions such as monthly or weekly orders.
The implication is that all financial documents that reflect a promise or demand for payment—whether in paper or electronic form—are now subject to stamp duty. This ensures that transactions are duly recorded and taxed within the formal economy.
Section 129 – Promissory Notes
Under Section 129, a promissory note is defined as any written promise, other than a bank note, to pay a specified sum of money. Importantly, even if the payment is conditional—such as depending on the occurrence of a future event or the availability of certain funds—the note is still treated as a promissory note for the purpose of duty.
This provision reflects the principle that tax laws prioritize substance over form. A conditional payment obligation remains a financial instrument and therefore attracts stamp duty.
Section 130 – Sale or Purchase of Options
This section extends stamp duty obligations to modern financial instruments, specifically option contracts. An option to buy or sell a stock or marketable security at a future date and agreed price is treated as a contract note, and thus liable to duty.
Where both a call and a put option exist in one agreement—referred to as a double option—the law treats it as two separate contracts, each chargeable to duty. This provision brings Nigeria’s duty regime in line with international capital market practices and ensures that derivative transactions contribute to tax revenue.
Section 131 – Conveyance on Sale
Section 131 provides that every transfer of interest or rights in real property is chargeable to duty as a conveyance on sale. This includes the transfer of ownership, rights, or title to land, buildings, or any real estate interest.
By doing so, the Act eliminates ambiguity about whether partial or indirect transfers attract stamp duty. Any document evidencing such conveyance now clearly falls within the chargeable category.
Section 132 – Conveyance in Consideration of Debt
Where property is conveyed to a creditor in satisfaction of a debt, Section 132 specifies that the amount of the debt shall be regarded as the consideration for which duty is payable.
For instance, if a company transfers a property valued at ₦50 million to settle a ₦40 million debt, the stamp duty will be computed on ₦40 million—the amount constituting the real economic benefit. This closes potential loopholes where property could be transferred to discharge debts without duty obligations.
Section 133 – Duty on Transfer of Mineral Assets
Section 133 brings mineral asset transactions under the stamp duty regime. It provides that any agreement or instrument transferring mineral assets or interests therein—whether related to oil, gas, or solid minerals—shall be subject to duty as outlined in the Eighth Schedule.
This inclusion is consistent with the government’s commitment to improve revenue transparency in the extractive sector and aligns the tax regime with provisions of the Petroleum Industry Act (PIA).
Section 134 – Duty on Exchange of Real Property
This section provides that where one real property is exchanged for another, any consideration exceeding ₦1,000,000 or the equivalent of the national minimum wage (whichever is higher) shall attract the same ad valorem duty as a conveyance on sale.
The intent is to prevent tax avoidance schemes in which parties might disguise a property sale as an exchange to evade stamp duty.
Section 135 – Lease Agreements
Section 135 imposes stamp duty on lease agreements or contracts relating to the letting, subletting, or assignment of land or buildings. Such agreements are treated as though they were actual leases executed for the stated term and consideration.
However, leases with an annual rental value below ₦10,000,000 or ten times the national minimum wage (whichever is higher) are exempt from duty. This provision introduces equity into the system by protecting low-income tenants and small-scale landlords, while ensuring that commercial leases contribute to fiscal revenue.
Section 136 – Duty on Share Capital
The Act also requires companies to pay an ad valorem duty on their share capital or any subsequent increase in share capital, as specified in the Ninth Schedule.
This ensures that capital formation and expansion by companies contribute to government revenue, reinforcing the link between corporate growth and fiscal responsibility.
Section 137 – Duty on Loan Capital
Section 137 extends duty to the loan capital of companies, defined as debenture stock, funded debt, or any other long-term corporate borrowing.
The section, however, excludes overdrafts, short-term loans not exceeding twelve months, and loans obtained for on-lending purposes—where the duty responsibility shifts to the ultimate beneficiary of the loan.
By distinguishing between short-term and long-term financing, the law ensures that genuine working capital arrangements are not unduly burdened, while longer-term funding activities are brought within the revenue net.
Section 138 – Marketable Securities
This section provides that any instrument made for issuing marketable securities—including shares, bonds, or debentures—by Nigerian companies or entities shall be subject to duty, regardless of whether the issuance occurs within or outside Nigeria.
This extraterritorial application is designed to prevent avoidance of stamp duty through offshore issuances, ensuring that Nigerian companies pay duties on instruments benefiting from their Nigerian corporate status.
Section 139 – Appraisement or Valuation
The final section in this series, Section 139, provides that every valuation or appraisal of real property conducted for the purpose of determining its worth is subject to a fixed duty, payable by the appraiser.
The section defines an appraiser as any person who values property for a fee—whether for sale, mortgage, insurance, or taxation purposes. This ensures that property valuation professionals operate within a regulated and accountable fiscal framework.
Broader Implications of Sections 128–139
The combined effect of these provisions is significant for Nigeria’s fiscal modernization agenda.
Firstly, the law now comprehensively captures both traditional and digital instruments, reflecting the realities of contemporary commerce. This modernization helps integrate electronic transactions—such as e-cheques, online credit agreements, and digital property transfers—into the tax net.
Secondly, the inclusion of financial derivatives, property conveyances, and mineral asset transfers broadens Nigeria’s non-oil tax base, creating sustainable revenue streams beyond petroleum taxes.
Thirdly, these sections reaffirm the legal importance of stamping. Any instrument not properly stamped cannot be admitted as evidence in court proceedings, reinforcing the value of compliance.
Lastly, the introduction of thresholds and exemptions demonstrates a policy of progressive taxation, where high-value transactions contribute proportionally more, while low-income and small-scale participants are shielded from additional tax burdens.
Conclusion
Sections 128 to 139 of the Nigeria Tax Act, 2025 represent a forward-looking reform that balances fiscal modernization with social fairness. By redefining chargeable instruments and extending coverage to digital and financial instruments, the Act strengthens the link between taxation and transparency in business operations.
For tax professionals, financial institutions, and businesses, compliance with these provisions is not merely a legal requirement—it is an essential element of financial integrity. Proper stamping of instruments validates transactions, safeguards admissibility in court, and ensures alignment with Nigeria’s evolving revenue administration framework.
In essence, the new regime under the NTA 2025 transforms stamp duties from a relic of paper-based transactions into a vital tool for documenting and taxing value in the digital age.
Olatunji Abdulrazaq CNA, ACTI, ACIArb(UK),
Founder/CEO, Taxmobile.Online
