The Federal Inland Revenue Service (FIRS) has stated that tenants are to 0.78 per cent as stamp duties and not six per cent as widely circulated on social media.
The FIRS had on Wednesday mandated landlords and property agents to charge stamp duty on all tenancy and lease agreements.
The landlords and property agents will act on behalf of the agency, they will therefore remit the stamp duty to FIRS.
Clarifying the charges, Director, Tax Policy of the FIRS, Mr. Mathew Gbonjubola during a webinar conference explained that “the 6% stamp duty is for tenancy above 21 years while 7 to 21 years lease or tenancy attracts 3% and less than 7-year tenancy is below 1%.”
According to Mr. Femi Oluwaniyi, Coordinating Director, Tax Operations Group at FIRS 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.”
In a statement posted on its official Twitter account, FIRS explained that it does not have the powers to increase taxes.
“Please note that stamp duties rate on rent or lease is graduated depending on the number of years in the agreement: 1-7 years is 0.78%; above 7 years to 21 is 3%; above 21 years is 6%.
“Note that FIRS did not and does not increase tax rate,” the federal tax collection agency said.
“Schedule to Stamp Duties Act, the part on Lease, states: For every N50 and also every fractional part of N50 of the rent of the year: if the term is definite and doesn’t exceed 7yrs–39 kobo or 0.78%; exceeds 7 years n doesn’t exceed 21yrs–N1.50 kobo or 3%; above 21 years– N3.00 (or 6%).
“We make this clarification following enquiries by taxpayers and to clarify that stamp duties rate on rent or lease is graduated according to the years in agreement. We appreciate the public for their support and enjoin all taxpayers to continue to comply with their tax obligations.
“If the duration of a rent or lease agreement is between one year and 7 years, Stamp Duties rate is 0.78% of the sum. If the duration of the agreement is above 7 years but not above 21 years, the rate is 3% of the sum. If the duration of the Agreement is above 21 years, the rate is 6% of the total sum.
“The FIRS will continue to work in collaboration with our stakeholders to make taxation the pivot of national development. When in doubt, please, you can contact FIRS for your reliable information.
