Is stamp duty still deducted from contractor payments in Nigeria? No. As of a 15 June 2026 circular from the Office of the Accountant-General of the Federation, government ministries, departments and agencies (MDAs) must stop the routine 1% stamp duty deduction from payments to contractors, vendors, suppliers and service providers. Stamp duty now applies to specific written instruments, not to the payments made under them.
What Did the Accountant-General's Circular Actually Change?
Dr Shamsudeen Ogunjimi, Accountant-General of the Federation, issued the directive by circular dated 15 June 2026. It instructs all MDAs to "immediately discontinue the one per cent stamp duty deduction provisions from payments to contractors, vendors, suppliers and service providers." The circular's reasoning is precise: under the Nigeria Tax Act 2025, stamp duty applies to chargeable instruments, not to payment transactions, and the long-standing practice of shaving 1% off every voucher had drifted out of line with the law.
The change applies prospectively, to contracts entered into on or after 1 January 2026, when the Nigeria Tax Act 2025 took effect. Deductions validly made before that date remain protected under the Act's savings provisions, so there is no retroactive clawback either way.
Why Was 1% Being Deducted From Every Government Payment?
Stamp duty has always applied to a written contract agreement itself, chargeable once, when the instrument is executed, typically as an ad valorem duty of around 1% of the contract value. Over time, many MDAs began treating that as an ongoing levy instead of a one-off charge, deducting 1% from every subsequent payment voucher issued under the contract, not just at signing. For a firm invoicing government monthly, that meant a fresh 1% bite out of every payment, indefinitely.
Construction firms, oilfield-services contractors, equipment suppliers and consultants working with federal MDAs were the businesses most exposed, since they tend to hold multi-year contracts with recurring payment cycles where the deduction compounded quietly across dozens of vouchers.
So Is Stamp Duty Gone Completely?
No. Stamp duty still applies to chargeable instruments: contract agreements, leases, bonds, guarantees, powers of attorney, share transfers, and similar documents. Contract agreements typically attract duty of around 1% of the contract's value, charged once at execution; other instruments carry either a smaller ad valorem rate or a flat fee. What has changed is that the duty is no longer treated as a recurring cost against every payment made under an already-stamped contract.
Before vs after the 15 June 2026 circular
Old MDA practice: 1% deducted from every payment voucher to a contractor, vendor, supplier or service provider, for the life of the contract.
Current rule: stamp duty is charged once, on the written instrument, when the contract is executed. Payments made afterward under that same contract are not separately dutiable.
Scope: applies to contracts entered from 1 January 2026, when the Nigeria Tax Act 2025 commenced. Contracts predating that, and duty validly deducted before then, continue under the old rules and are protected by the Act's savings clause.
What This Means for Your Business
If you sell to government MDAs on recurring contracts, check your next payment voucher. For construction, oil and gas services, and equipment or consulting firms billing federal agencies monthly or per milestone, removing the 1% deduction is a direct improvement to cash received on every invoice, not a paper change. It is worth confirming with your accounting team whether payments received since 1 January 2026 already reflect the correct treatment, and flagging any MDA that has not yet applied the circular.
The circular binds federal MDAs; state government agencies and parastatals may take longer to align their payment processes, so it is still worth verifying practice directly with each contracting authority rather than assuming uniform application. It is also a good moment to review the broader Nigeria Tax Act 2025 compliance picture, alongside your PAYE compliance checklist, and to make sure any withholding tax credits on those same government contracts are being claimed correctly, since stamp duty and withholding tax are often confused on the same payment voucher.
FAQ
Does this circular also stop withholding tax deductions on government contracts? No. Withholding tax is a separate obligation from stamp duty and is unaffected by this circular. MDAs will continue to withhold tax on qualifying payments to contractors and service providers; only the informal 1% stamp duty deduction on every payment has been stopped.
What if my contract was signed before 1 January 2026? It continues under the rules that applied when it was signed. Any stamp duty validly deducted before the Nigeria Tax Act 2025 took effect remains valid under the Act's savings provisions, so there is nothing to claim back for that period.
Do I still need to pay stamp duty on my contract at all? Yes, once, on the written instrument itself when it is executed, typically around 1% of contract value for a standard contract agreement. What is no longer permitted is treating that as a recurring charge against every payment made afterward under the same contract.
If your business supplies government MDAs on recurring contracts and is unsure whether your payments now reflect the correct stamp duty treatment, VOG Global Consult can review your contracts and payment vouchers and help you engage the relevant agency. VOG Global Consult, Suite 060 to 061, Orago Complex, Area 10, Garki, Abuja.