Nigeria’s new tax laws have brought stamp duties back into the spotlight. What was once a dusty colonial relic visible only on old contracts and receipts is now a modernized, digital-age tax that affects almost every business transaction you document.
Whether you’re signing a rental agreement, taking out a loan, buying shares, or even executing contracts online, stamp duty now applies more broadly than ever before.
The good news is that the rules are clearer, the rates are standardized, and you can even pay digitally.
What Exactly Gets Taxed?
The fundamental principle remains unchanged in the new Tax Act, 2025 signed into law by President Tinubu: stamp duty applies to written documents that record transactions, not the transactions themselves. Think of it as a tax on the paperwork that makes your agreements legally binding.
The law targets what it calls “chargeable instruments” or any document that’s signed, sealed, or otherwise made binding in connection with a taxable transaction. This includes contracts and agreements of all types, lease agreements for property, loan and mortgage documents, bills of exchange and promissory notes, share transfer forms, and settlement deeds or partnership agreements.
The key insight is that if you create a document intended to have legal effect that records an obligation, right, or transfer of value, it likely attracts stamp duty. The 2025 Nigerian Tax Act has modernized this by explicitly including digital contracts and harmonizing rates across different document types.
Digital Contracts Are Now Fully Covered
One of the most significant changes is the explicit recognition of digital instruments. Contracts executed electronically through email, electronic signatures, or digital platforms are now treated exactly like paper documents for stamp duty purposes.
This means that PDF contract you signed online, the digital loan agreement you executed through your bank’s app, or even the electronic share transfer you completed through your broker all qualify as chargeable instruments. The government’s reasoning is straightforward: just because a document never exists on paper doesn’t mean it escapes tax.
For enforcement, the law now allows digital stamping systems where the tax authority can validate and verify electronically-stamped documents. This brings Nigeria in line with global trends in e-commerce and digital governance.
Common Scenarios and What They Cost
Understanding the most frequent applications helps clarify how this affects your daily transactions. When you issue a bill of exchange like a cheque or sign a promissory note, stamp duty applies as a flat rate per document rather than a percentage of the amount.
For loan and mortgage agreements, any written agreement recording a loan attracts duty calculated as a small percentage of the principal amount. This applies whether the loan is secured by property or unsecured.
Property lease agreements trigger stamp duty based on both the lease term and annual rent payable. The rate typically uses a sliding scale that increases for longer-term leases, so a five-year lease pays more than a one-year lease for the same property.
Share transfers are among the most common stamp duty scenarios for investors. When you buy or sell shares in a company, the transfer instrument attracts duty calculated as a percentage of the consideration paid. Even when shares are gifted or transferred without cash payment, the duty is calculated based on market value.
Real-Life Examples
Consider Adaora, who signs a three-year lease for her boutique in Lagos with annual rent of ₦2 million. Her lease agreement attracts stamp duty calculated on both the lease term and total rent value. She pays this within 30 days of signing to ensure her lease is legally enforceable.
Emeka takes out a ₦50 million mortgage to buy a house in Abuja. His mortgage agreement attracts stamp duty calculated as a percentage of the ₦50 million principal amount. His bank typically handles this payment as part of the loan processing, but Emeka should verify this to avoid penalties.
Kemi buys ₦10 million worth of shares in a Nigerian company through her broker. The share transfer form attracts stamp duty at the prescribed rate, typically around 0.75% of the purchase price. Her broker should handle this payment, but Kemi remains ultimately responsible for ensuring compliance.
What’s Exempt and What’s Not
The new law maintains certain exemptions and zero-rated instruments to avoid overly burdening small transactions or charitable activities. Receipts below specified thresholds, certain government contracts, and instruments executed by registered charitable organizations typically qualify for exemptions.
However, it’s crucial to understand that “zero-rated” doesn’t mean “ignored.” Even exempt instruments often need to be presented for stamping and marked as exempt. Failure to present an instrument for stamping within the prescribed period can result in penalties, even if the duty rate turns out to be zero.
How to Calculate and Pay
Stamp duty calculation follows one of two methods depending on the document type. Some instruments attract a flat fee per document regardless of value, while others are charged as a percentage of the consideration or value recorded in the document.
The rates vary significantly by instrument type. Share transfers typically attract around 0.75%, while loan agreements might be charged at 0.375%. Leases use graduated rates depending on the term length and annual rent.
Payment responsibility depends on the transaction type. The Federal Inland Revenue Service handles corporate instruments and interstate transactions, while state tax authorities manage property leases and similar local transactions.
Once payment is made, the document receives a stamp either physically or electronically as evidence of compliance. This stamping is essential because unstamped documents may not be admissible in legal proceedings.
Timing Is Critical
The law typically requires payment within 30 days of document execution to avoid penalties. This timing is crucial because late payment can result in both financial penalties and potential legal complications if you need to enforce the document later.
For businesses executing multiple agreements, establishing a systematic approach to identify stampable documents and ensure timely payment becomes essential. Many companies now include stamp duty costs in their transaction budgeting to avoid surprises.
Common Questions and Practical Answers
Many people wonder whether small transactions trigger stamp duty obligations. While any chargeable instrument technically attracts duty, the law often provides de minimis thresholds below which duty doesn’t apply or is minimal.
The question of who pays stamp duty depends on the agreement between parties. Ultimately, the person benefiting from the document’s legal enforceability bears responsibility for ensuring compliance. In practice, this often means the party initiating the transaction handles payment.
For digital transactions, the payment process mirrors traditional stamping but uses electronic systems. The tax authority provides digital platforms for payment and verification, making compliance more convenient than traditional paper-based systems.
What You Should Do Now
Start by reviewing your recent transactions to identify documents that might require stamping. This includes rental agreements, loan documents, share transfers, and any significant contracts you’ve executed.
For ongoing business operations, establish a process to identify chargeable instruments as they’re created and budget for associated stamp duty costs. Many businesses find it helpful to maintain a register of stampable documents to ensure nothing is missed.
Consider whether your current document management systems can accommodate digital stamping requirements. As more transactions move online, having systems that can handle electronic stamp duty compliance becomes increasingly important.
The Bottom Line
Stamp duties represent the government’s recognition that documented transactions create legal rights and obligations worth protecting through the court system. The modest cost of stamp duty essentially purchases the government’s backing for your document’s legal enforceability.
The 2025 Tax Act’s modernization makes stamp duty more relevant than ever. As Nigeria’s economy becomes increasingly digital and documented, stamp duty provides a fair, transaction-based way to generate revenue while ensuring legal certainty for businesses and individuals.
Rather than viewing stamp duty as an additional burden, consider it an investment in legal protection. A properly stamped document is admissible in court, enforceable against other parties and provides you with the legal certainty that makes business relationships possible.
The key is awareness and planning. Understanding which transactions create stamp duty obligations, budgeting for associated costs and ensuring timely payment keeps you compliant while protecting your legal interests.
The new Tax Act enters into effect on January 1, 2026.
How Taxpal Can Help with Stamp Duty Compliance
Managing stamp duty obligations across multiple transactions and document types can be complex, especially for businesses with high transaction volumes. Taxpal provides comprehensive stamp duty support. Our services includes transaction analysis to identify stampable documents, automated calculation of duty amounts based on current rates, digital payment processing through authorized channels, compliance monitoring to ensure timely payment and documentation management for audit purposes.
Visit our website to choose between consultations or portal access, and let us help you navigate stamp duty requirements efficiently. Whether you’re handling occasional transactions or managing ongoing compliance, we’ll ensure your documents are properly stamped and legally protected.
