- August 1, 2020
- Posted by: admin
- Category: Business plans, Economics, Finance & accounting, Funding trends, Investment, Real Estate
The Federal Inland Revenue Service (FIRS) has explained that there is no basis for landlords to embark on rent increment in relation to the stamp duty payable on tenancy and lease agreement by tenants in the country.
FIRS had, about a week ago, mandated landlords and property agents to charge six per cent stamp duty on all tenancy and lease agreements they enter into with all lessees and remit the same promptly to the service.
Many had expressed concern that the six per cent duty could trigger a hike in rent by landlords and property owners.
However, the Executive Chairman, FIRS, Mr. Mohammad Mamman Nami, who provided clarifications Tuesday, stated that tenants and not landlords, should pay the applicable stamp duty by themselves at any commercial bank of their choice, and not to any landlord.
Nami, who gave this clarification as part of his ongoing national public enlightenment campaign on the Stamp Duty Act, spoke during a live radio programme in Abuja with the theme ‘The Midday Dialogue’.
He stated that since the responsibility of stamp duty payment was not that of the landlord, there was no justifiable reasons for any landlord to increase rent purportedly on account of the stamp duty, which is chargeable on the instrument of the transaction, that is, the tenancy or lease agreement or receipt exchanged between the landlords and the tenant, and not the actual rent fee the landlord is collecting from tenants.
He said: “The stamp duty is charged at graduated rates. Stamp duty on rent or lease from one year to less than seven years is 0.78 per cent. If your rent is N100,000, your due on it is N780. Your stamp duty could be as low as N200 or N300 if you live in a room and parlour or in the village where rent is low.
“If you can afford to pay your rent between seven to 21 years, your stamp duty is 3 per cent on the rent. If you can afford to pay rent at once from 21 years and above, your due is 6 per cent, which is very rare but we created room for it because some renters prefer long leases.
“Once you’ve reached an agreement with your landlord on the amount to pay for your rent of less than 7 years, you should calculate 0.78 per cent of the amount, go to a nearby bank and ask to pay the 0.78 per cent into the stamp duty account. Collect the teller and tender it to your landlord to legalise your transaction with him or her.
“It is the responsibility of the landlord before he or she issues a receipt or sign a rent or lease agreement with a tenant to make sure that the tenant presents evidence of stamp duty payment. A landlord that does not insist on evidence of stamp duty payment will bear the cost if the FIRS eventually finds out. You do not pay stamp duty on your own residential accommodation if you are the owner of the property even if you live in a 10-storey building.”
Nami also disclosed that the Finance Act 2019 has exempted 60 per cent of taxpayers, including Small and Micro Enterprises (SMEs) from paying tax as only companies which make up to N25 million turnover now pay tax or collect Value Added Tax (VAT).
This, he noted, has therefore relieved millions of Nigerians and SMES, including many businesses impacted by Covid-19, of their tax obligations to the government, which is a form of long-term tax palliative to them even before the pandemic.
The FIRS’ chairman stressed that the global economic downturn occasioned by the coronavirus pandemic has made it necessary for the three tiers of government to close tax loopholes in the country in order to fund the budget, provide needed public infrastructure and meet overhead cost like salary payment at federal, state and local government levels.
He enjoined Nigerians to pay their taxes as and when due.