Following a heated social media protest, last weekend, the Federal Inland Revenue Service (FIRS) has clarified the categories of stamp duties to be paid by tenants and property acquirers in Lagos and other states.
The Director, Tax Policy of the FIRS, Mr. Mathew Gbonjubola during a webinar conference explained that “the 6 percent stamp duty is for tenancy (renting a house) above 21 years, while 7 to 21 years lease or tenancy attracts 3 percent and less than 7-year tenancy is below 1 percent.”
Also, Mr. Femi Oluwaniyi, Coordinating Director, Tax Operations Group of the FIRS further clarified that stamp duty on rent or lease only applies to new agreements and not to renewals.
According to him, “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.”
During the virtual conference, the panellists said that “Nigerians should accept the fact that the country can no longer rely solely on revenue accruing from its natural resources to fund the budget, hence the need to embrace taxation as the new normal of national fiscal policy.”
A representative of Insurance firm, Price Waterhouse Coopers, Mr. Taiwo Oyedele, explained that “if you are an individual renting from another individual, your stamp duty is payable to the state tax authority such as LIRS, if you are resident in Lagos. If either the tenant or the landlord is a company, then the duty is payable to FIRS.”
He reiterated that “the obligation to pay stamp duty on rent rests with the tenant. However, FIRS is seeking to appoint the landlord as the agent to collect and remit the tax.”
Recall that the FIRS, Wednesday, mandated landlords and property agents to charge 6 percent Stamp Duty on all tenancy and lease agreements.
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