The Federal Inland Revenue Service, FIRS has clarified that the stamp duty payable on rent or lease agreement for a period below seven years is 0.78 p
The Federal Inland Revenue Service, FIRS has clarified that the stamp duty payable on rent or lease agreement for a period below seven years is 0.78 per cent. The tax service gave the clarification following the controversy that has trailed the new stamp duty policy on rent and lease agreements in the country announced on Wednesday.
The FIRS in its announcement directed landlords and property agents to charge stamp duty on all tenancy and lease agreements with tenants and property buyers and remit same to the Service. The stamp duty varies from less than 1 per cent to 6 per cent depending on the duration of the contract.
In a clarification on approved rates, the FIRS, through its spokesperson, Abdullahi Isma’ila, said stamp duty rate on tenancy rent or lease agreement for a period below seven years will attract only 0.78 per cent rate charge.
“Please note that Stamp Duties rate on Rent/Lease is graduated depending on the number of years in the Agreement as follows: 1-7 years is 0.78%; above 7 to 21 years is 3%; above 21 years is 6%,” Mr Isma’ila clarified in a tweet on Saturday. He also denied that the FIRS increased, or is planning to increase the prevailing tax rates in the country.
Also, the Director, Tax Policy in FIRS, Mathew Gbonjubola, during a webinar conference on Saturday gave further clarification to the issue.
“The 6% stamp duty is for tenancy above 21 years, while 7 to 21 years lease or tenancy attracts 3%, and less than 7-years tenancy is below 1% (0.78%),” Mr. Gbonjubola explained.
On his part, the Coordinating Director, Tax Operations Group of the FIRS, Femi Oluwaniyi, also said stamp duty on rent or lease only applies to new agreements and not to renewals.
“If a new agreement is drawn up at renewal, that document should be stamped, just like initial agreement. If, however, the renewal terms are already in the initial agreement, such that no new document is prepared, but just payment of the rent for renewal, then no stamping is required,” Oluwaniyi said.
Since the announcement of the stamp duty on rent, many Nigerians, particularly workers who pay annual rents for their accommodations, have been apprehensive, as many fear they are expected to pay 6 per cent of their rent each time they want to renew them. The Nigeria Labour Congress (NLC), through its President, Ayuba Wabba, has already rejected the new stamp duty policy, describing it as additional burden on the already overburdened Nigerian workers.
During the webinar, the panelists urged Nigerians to accept the reality that the country can no longer rely solely on revenue accruing from its natural resources to fund its annual budgets. They said it was obvious taxation was the new normal of national fiscal policy in the search for alternatives to finance government activities and programmes.
