Business - Economy
Updated: July 28, 2020

FIRS Makes More Revelation Concerning 'Patriotic' Rent Stamp Duty

By Olalekan Fakoyejo
July 28, 2020
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More clarification has been given regarding the stamp duty charge on rents and leases which was imposed by the Federal Inland Revenue Service (FIRS). It was revealed that the stamp duty charge, which will be paid by the tenant, will not be applicable on renewal of rent or lease, but just new agreements.

According to FIRS' coordinating director of the tax operations group, Femi Oluwaniyi, if a new agreement is done during renewal, then a stamp duty charge will apply as well, “The FIRS 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, was quoted by FIRS' director of communications and liaison department, Abdullahi Ahmad.

What You Need To Know About Payment

There have been confusion regarding the rent tax initiated by the Federal Inland Revenue Service (FIRS). The stamp duty placed on rent has been met by condemnation from Nigerians, and in order to curb the chaos caused by the announcement, the FIRS has clarified the impact of the tax on rent.

According to the FIRS executive chairman, Muhammad Nami, the six percent is only for rent or lease above 21-years. He said Nigerians renting apartment or other building will only have to pay 0.78 percent stamp duty on their yearly rent. Meanwhile, three percent charge will be done on rent agreement that falls between 7 and 21 years.

Stamp Duty Charge Is 'Patriotic Duty To Nigerians'

Nami promised a stamp duty palliative package for Nigerians, he said Nigerians must see payment of stamp duty as a patriotic act for the development of Nigeria, regardless the discomfort it causes, “There is never a time when taxation is convenient for everybody to pay,” Nami said, adding that tax payment is “a patriotic duty to our dear country, Nigeria”.

He explained that stamp duty has been a part of Nigeria even before the independence of the country. He said President Muhammadu Buhari-led administration didn't introduce stamp duty, “There is never a time when taxation is convenient for everybody to pay,” he said, encouraging Nigerians to see tax payment “as a patriotic duty to our dear country, Nigeria”.

“Stamp duty dates back to colonial times in Nigeria. It has been a form of tax in Nigeria as far back as 1939 when you and I were not yet born. It was codified in our laws in 1953, that is before independence. It was consolidated in 2002, published in 2006 and further reworked into the Stamp Duty Act 2004.

“The joint tax board (JTB) where states are represented consider it necessary to bring the stamp duty act to the attention of Nigerians following the recent launch of the inter-ministerial committee on audit and recovery of back years stamp duties where the new FIRS adhesive stamp duty was unveiled.

“As chairman of the JTB, the FIRS was mandated to enlighten Nigerians on stamp duty. That’s why the FIRS published a clarification notice on the stamp duty and we shall continue to educate the public on it.”

Landlord Are Not Collecting Agents

Nami said tenants should pay their stamp duty charge to banks or FIRS office closest to them. He said the tenants shouldn't make payment of stamp duty to landlord, as they are not FIRS collecting agents, “It is not paid by the landlord. Landlords are not our collecting agents.

It is the responsibility of the tenant to pay stamp duty and you don’t have to give it to your landlord. As a tenant, calculate 0.78 percent of your rent and pay that fraction at the FIRS office nearer to you or at your bank. You should then fix the stamp duty imprimatur on the tenancy agreement before you sign it with your landlord. It is as simple as that."