Government contractors in Nigeria have spent years watching 1% disappear from every payment they received from a ministry or agency. That automatic deduction, once applied uniformly across all MDA payments, treated the transaction itself as the taxable event. A June 2026 directive from the Accountant-General of the Federation confirmed that this practice no longer has a legal basis.
The shift stems from the Nigeria Tax Act 2025, which took effect on January 1, 2026, and repealed the old Stamp Duties Act. Under the new framework, stamp duty applies only to chargeable instruments listed in the Ninth Schedule of the Act. The 1% contractor deduction removed Nigeria businesses have long absorbed is officially gone under this instrument-based structure.
Here is what actually changed, what still applies, and what the savings provision means for deductions made before the new law kicked in.
Federal government ends 1% contractor stamp duty deduction in Nigeria through new circular
A Federal Treasury Circular dated June 15, 2026, signed by Accountant-General of the Federation Shamseldeen Ogunjimi, directed all MDAs to immediately halt the 1% stamp duty deduction. The circular stated that stamp duty is imposed on chargeable instruments, not on payment transactions, under the Nigeria Tax Act 2025.
More on Nigeria’s tax:
What the Nigeria Tax Act repealed — a guide to the old laws now gone
MDAs must now ensure that stamp duty is only charged, deducted, or remitted where the Act expressly requires it. The distinction the circular draws is critical: a payment from a ministry to a contractor is a financial transaction, not a dutiable instrument. Only written documents that formalize agreements, transfers, or other legal arrangements fall under the Act’s scope.
The Office of the Accountant-General stated that the directive became necessary to ensure compliance and prevent misapplication of statutory deductions under the new tax regime. Taiwo Oyedele, Nigeria’s Finance Minister and former Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has described the broader tax overhaul as “pro-poor” and aimed at easing the burden on low-income earners and small businesses, Punch reported.
What stamp duty still applies under the Ninth Schedule of the NTA
The end of the 1% contractor deduction does not mean stamp duty has vanished from Nigerian commercial life. The Ninth Schedule of the Nigeria Tax Act 2025 lists specific instruments that remain chargeable, and several of them touch everyday business and personal transactions.
Conveyances on sale of real property remain dutiable at an ad valorem rate of 1.5% under Item 33 of the Ninth Schedule. Section 131 of the NTA narrows this specifically to real property, meaning transfers of intangible assets and intellectual property are no longer captured. Lease agreements attract duty at rates specified in the schedule, and the lessee bears the payment obligation.
Electronic money transfers of ₦10,000 and above attract a flat ₦50 stamp duty, now payable by the sender rather than the receiver. Nairametrics reported that this charge replaced the old Electronic Money Transfer Levy, which banks previously deducted from the recipient’s account. Transfers below ₦10,000, salary payments, and intra-bank transfers are exempt from the charge.
Share capital and loan capital also attract ad valorem duties under the schedule. The Ninth Schedule fixes share capital duty at 0.75% of nominal value, while ordinary loan capital is dutiable at 0.125% for loans exceeding 12 months in tenor, Andersen Nigeria noted in an analysis published on its website. Section 133 also expressly covers mineral asset transfers, including rights in oil, gas, solid minerals, and exploration licenses.
Savings provision protects deductions made before January 1, 2026
The Federal Treasury Circular included a key clarification for contractors and agencies with obligations that straddle the old and new regimes. Stamp duties validly deducted before the Nigeria Tax Act 2025 took effect remain preserved under the savings provisions of the law.
MDAs do not need to reverse deductions that were correctly applied before January 1, 2026, under the old framework. The circular specified that contracts awarded before that date will continue under the previous Stamp Duties Act, The Guardian Nigeria reported. All contracts awarded on or after that date fall entirely under the Nigeria Tax Act 2025.
An analysis published by Andersen Nigeria noted that the NTA clarifies the parties responsible for paying stamp duty through Section 126(2) and the Ninth Schedule. The firm warned that unstamped commercial leases and agreements can result in significant penalties and interest under the new regime.
Quick reference: chargeable vs non-chargeable instruments under the NTA
The table below summarizes the instruments that remain chargeable and those that are now exempt or no longer applicable under the stamp duty Nigeria 2026 framework established by the Nigeria Tax Act 2025.
Instruments still chargeable under the Ninth Schedule
| Chargeable instruments | Non-chargeable / exempt items |
| Conveyance on sale of real property (1.5% ad valorem) | MDA contractor/vendor payment transactions (1% deduction removed) |
| Lease and tenancy agreements (rates per Ninth Schedule) | Electronic transfers below ₦10,000 |
| Bills of exchange and promissory notes | Salary payment documents |
| Electronic transfers of ₦10,000+ (₦50 flat duty, sender pays) | Intra-bank transfers (same bank) |
| Share capital (0.75% of nominal value) | Transfers of government securities |
| Loan capital over 12 months (0.125% ad valorem) | Documents for transfer of stocks and shares |
| Mineral asset transfers (oil, gas, solid minerals, exploration licenses) | Transfers of intangible assets and intellectual property |
| General agreements not expressly specified (₦1,000 flat duty) | — |
Note: Contracts awarded before January 1, 2026, are not exempt from stamp duty. They continue to be administered under the previous Stamp Duties Act’s provisions, including the 1% deduction framework that applied at the time of award.
Sources: Nigeria Tax Act 2025, Ninth Schedule; Federal Treasury Circular, June 15, 2026; Andersen Nigeria; BusinessDay.
What stamp duty Nigeria 2026 changes mean for contractors and businesses
The end of the 1% deduction on MDA payments directly reduces costs for contractors, vendors, and suppliers doing business with the federal government. On a ₦100 million contract, that deduction previously took ₦1 million from the payment, regardless of whether any underlying instrument required stamping.
“The tax act is heavily pro-poor. Government wants to tax the fruit, not the seed.” — Ben Enamudu, Chairman of the Chartered Institute of Taxation of Nigeria (CITN) Abuja District, via Legit.ng
Businesses and individuals still need to account for stamp duty on the specific instruments the Ninth Schedule covers. General agreements not expressly specified elsewhere in the schedule attract a flat ₦1,000 stamp duty regardless of value, Andersen Nigeria noted. Real estate buyers and lessees must factor in the applicable ad valorem rates when budgeting for property transactions.
Section 26 of the NTA also tightened the compliance timeline by reducing the stamping window from 40 days to 30 days after execution. Missing that window can trigger penalties and interest, and unstamped instruments remain inadmissible as court evidence under Section 127 of the Act.
