The Federal Government has directed all Ministries, Departments and Agencies (MDAs) to immediately discontinue the deduction of one per cent stamp duty from payments made to contractors, vendors, suppliers and service providers, in line with the provisions of the Nigeria Tax Act 2025.
The directive was contained in a Federal Treasury Circular dated June 15, 2026, and signed by the Accountant-General of the Federation, Mr Shamseldeen Ogunjimi.
According to the circular, the Nigeria Tax Act 2025 clearly stipulates that stamp duty is imposed on chargeable instruments rather than on payment transactions, making the long-standing practice of deducting one per cent from government payments inconsistent with the current legal framework.
The Office of the Accountant-General of the Federation stated that the directive became necessary to ensure compliance with the new tax law and prevent the misapplication of statutory deductions across government institutions.
“In view of the above and in order to ensure strict compliance with the provisions of the Nigeria Tax Act 2025, as well as to prevent the misapplication of statutory deductions, all MDAs are hereby directed to note that the Nigeria Tax Act 2025 provides that stamp duty is imposed on chargeable instruments and not on payment transactions,” the circular stated.
The government further directed all MDAs to discontinue the one per cent stamp duty deduction from payments to contractors, vendors, suppliers and service providers.
It also instructed agencies to ensure that stamp duty is charged, deducted or remitted only where expressly required under the provisions of the Nigeria Tax Act 2025.
According to the Accountant-General, the new regime limits the application of stamp duty to instruments and transactions specifically listed as chargeable under the Act and its accompanying schedules.
The circular clarified, however, that stamp duties validly deducted before the commencement of the Nigeria Tax Act 2025 would remain protected under the savings provisions of the law.
It added that the Act, which took effect on January 1, 2026, now serves as the governing framework for stamp duty administration in Nigeria.
The Federal Government also explained that contracts awarded before January 1, 2026, would continue to be treated under the previous regulatory framework, while contracts awarded after that date would be governed by the provisions of the new tax legislation.
Attached to the circular was the Ninth Schedule of the Nigeria Tax Act 2025, which outlines instruments that remain subject to stamp duty.
These include agreements for the sale of real property, annuities, assignments, bonds, bills of exchange, nominal shares, loan capital and contract notes for marketable securities.
The applicable rates range from 0.04 per cent to 1.5 per cent, depending on the nature of the instrument or transaction involved.
The circular was addressed to key government officials and institutions, including ministers, permanent secretaries, heads of extra-ministerial departments and agencies, directors of finance and accounts, internal auditors, federal pay officers and heads of Nigerian diplomatic missions abroad.
The recipients were directed to ensure the widest possible circulation of the directive and strict compliance across all government entities.
The latest policy marks a significant departure from an earlier Treasury Circular issued in 2017, which required MDAs to deduct and remit one per cent stamp duty on payments made to contractors and suppliers as part of government revenue collection efforts.
However, the enactment of the Nigeria Tax Act 2025 introduced comprehensive reforms to the country’s tax administration system, including clearer definitions of transactions and instruments that qualify for stamp duty obligations.
Tax experts say the clarification could reduce compliance disputes between government agencies and contractors while improving certainty in the administration of stamp duty obligations.
The directive effectively ends the deduction of stamp duty on routine government payment transactions and aligns enforcement practices with the provisions of the Nigeria Tax Act 2025.
With the new framework now in force, businesses engaging with government institutions are expected to benefit from improved clarity regarding applicable deductions, while MDAs are required to ensure that future stamp duty collections strictly comply with the law.
