1.1 Introduction
Stamp duty is a Non-Tax Revenue (NTR) that are imposed by specific Acts of parliament and administered by ministries and other government departments. It is not a tax on transactions rather it is a tax on commercial and legal documents which record and give effects to certain transactions. Stamp duty in a simple term is a levy, charge or duty on a value documents to make them legitimate in the courts of law. A value document is usually one that represents the interest of two or more parties. Stamp duty payable on specified instruments is either ad valorem (at a percentage rate) or fixed. And where the transaction is orally effected or it arises solely from the conduct of the parties no duty will be due since no document will be available for stamping. The Federal Government impose charge or collect duties upon instruments relating to matters between a company and an individual or groups whereas State Governments charge or collect duties of instruments executed between persons or individuals.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Today, most of the transactions are conducted electronically which has greatly hampered collection of stamp duty using adhesive paper stamps on such transaction since they are not in physical form. Therefore, to effectively monitor these transactions, an electronic means has to be deployed. However, the previous system of physical embossing was unfriendly and characterized by constant movement. There were long queues, congestions and delay of service delivery. Besides, the embossing machine used to make impressions on the instruments was used by other Government departments, and pressing of the appropriate stamp on the instruments was done at one place-the ministry of finance, planning and Economics Development. The process was manual with assessments done by Federal Inland Revenue Services thereby not facilitating clients to understand the assessment process and basis of assessment. A client had to pay the fees in only one bank and had to return the next day.
With the advent of digital technology, postal services all over the country seem to be fading fast into complete irrelevance. To revamp this organization, efforts are to be made to revitalize stamping (N50 - stamping) on receipts (in conformity with the Stamp Duty Act 2004, as amended in 2010). This law states that receipts on transaction in Nigeria would not be authenticated without affixing postage stamps on them. With this, legal documents would not be legal unless the duty stamp was affixed on them.
Another challenge was difficulties in storage and retrieval of stamp records, the old process was prone to paper and process – related fraudulent practices, the procedure was cumbersome and had challenges like unsecure and unreliable collection mechanism and poor service delivery as staff was overwhelmed by the manual work. This puts a number of clients at a risk of holding instruments that are not duly stamped. This work is therefore, aimed at solving problems pertinent to this situation. This is simply a change in the process of assessing, that, knows what you are supposed to pay and for what documentation (instrument) and actually paying stamp duty. The new system will provides for amendment like in instances when a wrong document was chosen during declaration on the portal. It will also streamlines processes and improve voluntary compliance. Captures data into a secure database, which allows client’s data to be easily assed anytime and enable users to perform transactions in the comfort of their homes, offices or any place with internet connectivity.
1.3 Statement of Problem
Investigation reveals the problems of the existing Electronic Stamp Duty Payment System which are:
- Stamp counterfeiting.
- Poor revenue generation.
- Inadequate education on tax matter.
- Leakages of revenue accruing to the government from the sale of stamps
1.4 Aim and Objectives of the Study
The aim of the study is to design and implement an Electronic Stamp Duty Payment System. In achieving this aim, the following specific objectives were laid out as follows to design and develop an application software that will:
- Eliminate stamp counterfeit.
- Reduce costs of compliance and improve tax compliance.
- Enable easy detection of defaulters as necessitated by inefficient manual systems
1.5 Significance of Study
The study if implemented in real life would be of immense benefit to the Nigerian Governments, FIRS, taxpayers, policy makers, researchers and academicians in the following ways:
- Checking of fraud: The stamp certificate is auto generated through a secure process in e-Stamp that assigns a certificate barcode which is registered in our database. This means that if someone produces a fake/counterfeit certificate, it will not be in our database and cannot be validated in our system.
- The system reduces administrative workload and increase staff productivity: The stamp certificate is electronically generated removing fatigue of physical embossment. This in effect means no more embossing of instruments with stamps.
- Online application for duplicate stamp certificates: In case the small stamp could be creased or destroyed as in the old case of physical embossment, the system will allow you get a duplicate certificate if the need arises.
- It improves the economy of the implementing organization and the country: Increased stamp revenue to the Governments since more people will want to have their instruments issued stamp certificates as a result of gained knowledge and more simplified process.
- It saves time: Reduced contact hours in FIRS office thus freeing taxpayers to use their time on other value adding engagement.
- Stamp duty payments can now be made in FIRS partner bank of the client choice.
1.6 Scope of Study
The study focuses on the Design and Implementation of an Electronic Stamp Duty Payment System using Federal Inland Revenue Services (FIRS) as a case study.
1.7 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).
1.8 Definition of Terms
Web Site: A website is a collection of many interconnected web pages organized by a specific college, organization company etc., containing web pages (good and commodities) on the Internet. Web site is stored on web servers. There are many web site and thousands of HTML pages on each web site.
Hyperlinks: Hyperlinks are highlighted words and phrase you find on web documents that you can click on as to jump to some other documents or Internet services. (Clex 1990)
Offline: Disconnected from computer network; describes a computer terminal or peripheral device disconnected from a computer network. (Wikipedia 2011)
System: Set of computer components that is, an assembling of hardware, software and peripherals functioning together. (Fans 2011)
Automation: This is the use of control system such as computer to control and process data, reducing the need for human intervention.
Database: This refers to a large store of related data on a computer that can be accessed and modified by the user.
Record: Is a document made or received in the course of a practical activity as an instrument or a by-product of such activity, and set aside for action or reference.
