0 comments

Stamp Duties Act: A Breakdown Of New Tenancy Policy By FIRS

by on July 25, 2020
 

Confusion has arisen among many Nigerians, as the Federal Inland Revenue Service (FIRS), as part of measures to reduce disputes in real estate related transactions and generate more revenue, has announced that stamp duty will be paid on house rent and Certificate of Occupancy (C of O), in line with its new adhesive duty.

However, it is informative for concerned Nigerians to note that Stamp duty on most rent agreements is at the rate of 0.78%, not 6% as being widely circulated. Based on the Stamp Duties Act, stamp duty on lease or rent agreement is payable as follows:

If the lease term is less than 7 years, stamp duty rate is 0.78% (e.g. N780 on N100k rent)

For a term of 7+ to 21 years, stamp duty rate is 3% (N3k for N100k rent)

READ  Nigerians will be Charged For Bank Deposits In 2020 ~ Apex Bank

For a term above 21 years, stamp duty rate is 6% (e.g. N6k for N100k rent)

Given that most people enter into rent agreements for less than 7 years, the applicable stamp duty rate to most people will be 0.78%.

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.

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.

Here is the summary of stamp duty payable on rent:

Source: Taiwo Oyedele

The Federal Inland Revenue Service (FIRS), as part of measures to reduce disputes in real estate related transactions and generate more revenue, recently announced that stamp duty will be paid on house rent and Certificate of Occupancy (C of O), in line with its new adhesive duty.

READ  GLO Offices Closed Down Over Inability to Pay N24.3 bn Value Added Tax

Thr FIRS Director for Communication and Liaison Department, Mr Abdullahi Ahmad, said this in a statement in Abuja, on Thursday July 2.

Ahmad said the new policy was necessary so as to give the instruments the legal backing required, and make them legally binding on all parties involved in such transactions.

Ahmad further urged Nigerians to ensure that documents that relate to rent and lease agreements for homes or offices, C of O, and other common business-related transaction instruments were authenticated with the new FIRS Adhesive Stamp Duty.

While quoting the Executive Chairman of FIRS, Ahmed said, “The following are the chargeable transactions in the Fixed Duty Instruments category, Power of Attorney (PoA), Certificate of Occupancy (C of O), Proxy form; Appointment of Receiver, Memorandum of Understanding (MoU), Joint Venture Agreements (JVA), Guarantor’s form, and Ordinary Agreements Receipts.

READ  BREAKING| Again, EFCC arrest Atiku's Lawyer, Son in-law

“While ad-Valorem Instruments chargeable under the Stamp Duties Act are Deed of Assignment, Sales Agreement, Legal Mortgage or Debentures, Tenancy or Lease Agreement, Insurance Policies, Contract Agreements, Vending Agreement, Promissory Notes, Charter-Party and Contract Notes.

“Stamp duty is basically charged in two forms, either ad valorem where duty payable is a percentage of the consideration on an instrument or a fixed sum irrespective of the consideration on dutiable instrument or document.’’

Be the first to comment!
 
Leave a reply »

 

Leave a Response