Francis Uzoma Ubani, a Fellow of the Chartered Institute of Taxation of Nigeria (CITN), has raised concerns about certain provisions in the 2021 and 2022 Finance Acts, labeling some as unconstitutional. Specifically, he criticized the amendment to the sharing formula for revenue from stamp duties and Electronic Money Transfer Levy (EMTL) in the 2022 Finance Act, deeming it illegal.
In a letter addressed to the Executive Chairman of the Federal Inland Revenue Service (FIRS), Dr. Zacch Adedeji, Ubani emphasized the inconsistency of the adopted sharing formula with the Nigerian Constitution. The contested provision stipulates that 15% of the revenue goes to the Federal Government and the Federal Capital Territory, 50% to State Governments, and 35% to Local Governments.
Ubani argued that this distribution contradicts Sections 2(2) and 163 of the Constitution of the Federal Republic of Nigeria, 1999, as altered. He urged the FIRS to void the provision and any related regulations made by the minister, emphasizing that revenue from Stamp Duties/EMTL should be distributed based on derivation, as outlined in Section 163 of the constitution.
He highlighted the need for decentralization in the tax system and criticized the centralized approach that persists despite demands for devolution of powers to states, especially in taxation matters.
Additionally, Ubani asserted that the FIRS’s collection, recovery, and distribution of revenue from stamp duties/EMTL are unlawful and contrary to constitutional provisions. He called on the FIRS to instruct deposit money banks and financial institutions to promptly remit qualified chargeable stamp duties/EMTL to the relevant tax authorities in different states, in line with the amended Stamp Duties Act.
The letter reflects Ubani’s plea for reevaluating the Finance Acts to ensure constitutional alignment and promote decentralization in the tax system.
