Here's What You Need To Know About FIRS' Controversial Rent Tax

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.

The stamp duty on rent had been adopted by the government as it aggressively tries to expand its revenue amidst declining sources of income. Since the announcement of the rent tax, it had been stated that Nigerians will have to start paying six percent on house rent or lease each year.

In view of the financial burden it will place on Nigerians, a social media protest was held. But the FIRS executive chairman, Muhammad Nami, during a webinar organised by OTISVIP, clarified the tax issue, stating that Nigerians won't be taxed yearly as widely circulated.

According to 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.

Why The Tax On Rent Is Important

AllNews learnt that the stamp duty was initiated because the country can no longer depend on crude oil for its revenue. AllNews had previously reported that the oil price crashed, thereby, significantly affecting the revenue of Nigeria. Oil revenue has served as Nigeria's major income for years.

But the President Muhammadu Buharius-led administration has been pushing for more revenue sources, mostly through tax. The country increased its value added tax from 5 percent to 7.5 percent, increased its fuel price, demanded stamp duty on bank transactions above N10,000. Now it is including stamp duty on rent.

Tax Net Need To Get Wider

According to the director of FIRS communications and liaison department, Abdullahi Ismaila Ahmad, during the webinar, it was agreed that there's a need to expand the tax net in Nigeria for development, "While all panellists agreed on the need for taxation to complement government’s revenue flow from natural resources, a lively debate ensued on the timing of the stamp duty campaign and the public debate surrounding the application of tax revenue in the nation-building processes, especially in building public infrastructure. 

“The panellists stressed the need for prudent management of tax revenue even as they enjoined Nigerians to embrace the fact that the tax net needs to get wider to accommodate more citizens for holistic national development.”