The Federal Government has directed all Ministries, Departments and Agencies to immediately discontinue the deduction of one per cent stamp duty from payments made to contractors, vendors, suppliers and service providers, citing 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, Shamseldeen Ogunjimi. According to the circular, the new tax law makes it clear that stamp duty is imposed on chargeable instruments rather than on payment transactions, rendering 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 Nigeria Tax Act 2025 and prevent the misapplication of statutory deductions. “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.
It further directed MDAs to “discontinue the one per cent stamp duty deduction from payments to contractors, vendors, suppliers and service providers” and ensure that stamp duty is only charged, deducted or remitted where expressly required under the provisions of the Act.
The Accountant-General explained that under the new regime, stamp duty would apply strictly to instruments and transactions specifically listed as chargeable under the law and its schedules. The circular, however, clarified that stamp duties validly deducted before the commencement of the Nigeria Tax Act 2025 would remain preserved under the savings provisions of the law.
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The government further explained that while contracts awarded before January 1, 2026, would continue to be treated under the previous framework, contracts awarded after that date would be subject to the provisions of the new tax law. 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, with rates ranging from 0.04 per cent to 1.5 per cent, depending on the nature of the transaction.
The circular was addressed to top 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, directing them to give the circular the widest possible circulation and ensure strict compliance.
The Federal Government had, through a 2017 Treasury Circular, directed MDAs to deduct and remit one per cent stamp duty on payments to contractors and suppliers as part of revenue collection efforts. However, the enactment of the Nigeria Tax Act 2025 introduced sweeping reforms to the country’s tax administration framework, including a clearer definition of transactions and instruments subject to stamp duty.