Nigeria Halts 1% Stamp Duty on Contractor Payments Under 2025 Tax Act
Updated
Updated · msmeafricaonline.com · Jun 24
Nigeria Halts 1% Stamp Duty on Contractor Payments Under 2025 Tax Act
1 articles · Updated · msmeafricaonline.com · Jun 24
Summary
A June 15 Treasury circular ordered all ministries, departments and agencies to immediately stop deducting 1% stamp duty from payments to contractors, suppliers, vendors and service providers.
The change follows the Nigeria Tax Act 2025, which says stamp duty applies to chargeable instruments—not routine payment transactions—making the long-running deduction inconsistent with the law.
Contracts and transactions executed before Jan. 1, 2026 remain under the old framework, and stamp duties already deducted before the new law took effect will still stand.
Stamp duty has not been abolished entirely: the Act’s Ninth Schedule still charges 0.04% to 1.5% on instruments such as property sale agreements, bonds, bills of exchange and some securities transactions.
The directive reverses a 2017 revenue-raising policy and is expected to ease payment losses for government contractors while tightening tax compliance around legally chargeable transactions.
As Nigeria cuts one business tax while adding others, are entrepreneurs genuinely better off or is it just fiscal shuffling?
Can Nigeria's wave of funding initiatives create enough jobs to absorb the talent it's spending billions to develop?
With billions invested in medical training, how will Nigeria stop its new doctors from fueling the 'Japa' brain drain?
Major Tax Overhaul: Nigeria Abolishes 1% Stamp Duty on Contractor Payments Under 2025 Act
Overview
In June 2026, the Nigerian Federal Government halted the 1% stamp duty deduction on payments to contractors, vendors, and service providers, requiring all government agencies to stop this practice immediately. This major change follows the Nigeria Tax Act 2025, which redefined the scope of stamp duty by providing clearer definitions of which transactions and instruments are subject to the tax. The cessation of the 1% deduction aligns with these updated legal provisions, marking a significant shift in Nigeria’s tax administration and aiming to simplify compliance for businesses working with the government.