FG Halts One Per Cent Stamp Duty Deductions on Contractor Payments, Citing Nigeria Tax Act 2025 Reforms
The Federal Government has issued a decisive directive to all Ministries, Departments, and Agencies (MDAs), mandating the immediate cessation of the one per cent stamp duty deduction from payments made to contractors, vendors, suppliers, and service providers. This significant policy shift is grounded in the provisions of the recently enacted Nigeria Tax Act 2025, which fundamentally redefines the scope of stamp duty application.
In a report by The Punch Business on June 18, 2026, it was revealed that the directive is contained within a Federal Treasury Circular dated June 15, 2026, and officially signed by the Accountant-General of the Federation, Shamsudeen Ogunjimi. The circular explicitly clarifies that the Nigeria Tax Act 2025 imposes stamp duty on chargeable instruments, not on payment transactions. This distinction renders the long-standing practice of deducting one per cent from government payments inconsistent with the current legal framework, necessitating this immediate halt to prevent the misapplication of statutory deductions and ensure strict adherence to the new tax law.
The Office of the Accountant-General of the Federation underscored the imperative of this directive, stating that it is crucial for ensuring compliance with the Nigeria Tax Act 2025. The circular elaborates that the Act provides that stamp duty is imposed on chargeable instruments and not on payment transactions. Consequently, all MDAs are instructed to discontinue the one per cent stamp duty deduction from payments to contractors, vendors, suppliers, and service providers. Furthermore, they are directed to ensure that stamp duty is only charged, deducted, or remitted where expressly required under the specific provisions of the Act.
Under the new tax regime, stamp duty will be applied strictly to instruments and transactions explicitly listed as chargeable within the law and its accompanying schedules. The circular, however, provides a crucial clarification: stamp duties that were validly deducted prior to the commencement of the Nigeria Tax Act 2025 will remain preserved under the savings provisions of the law. The Act, which officially took effect on January 1, 2026, now governs the entire administration of stamp duties across Nigeria.
The government has further explained that while contracts awarded before January 1, 2026, will continue to be administered under the previous framework, all contracts awarded on or after this date will be subject to the stipulations of the Nigeria Tax Act 2025. Attached to the circular was the Ninth Schedule of the Nigeria Tax Act 2025, which meticulously outlines the instruments that remain subject to stamp duty. These include, but are not limited to, agreements for the sale of real property, annuities, assignments, bonds, bills of exchange, nominal shares, loan capital, and contract notes for marketable securities. The rates for these duties range from 0.04 per cent to 1.5 per cent, contingent upon the specific nature of the transaction.
The directive, addressed to a comprehensive list of high-ranking government officials and institutions—including ministers, permanent secretaries, heads of extra-ministerial agencies, directors of finance and accounts, internal auditors, federal pay officers, and heads of diplomatic missions—emphasises the need for the widest possible circulation and strict compliance. This move effectively terminates the deduction of stamp duty on routine government payment transactions, aligning enforcement practices with the precise definitions and requirements of the Nigeria Tax Act 2025. This reform is of significant consequence for lawyers, compliance officers, general counsel, investors, and corporate executives, requiring a thorough review of existing contractual obligations and payment processes to ensure adherence to the new legal landscape governing stamp duties.
