Federal Inland Revenue Service (FIRS) has issued a clarification on stamp duty rates for rents and leases, following public outrage.
Last week, the agency announced a 6% percent stamp duty rates on rents and leases, which sparked an outcry from many Nigerians who called for a reversal.
Read Also: Outcry As FIRS Directs Landlords, Property Agents To Charge 6% Stamp Duty From Tenants
The revenue collection agency has now explained that it is not imposing the new rate across board.
FIRS executive chairman, Muhammad Nami who spoke at a webinar organised by OTISVIP, said the six percent stamp duty charge on tenancy previously announced will only apply to tenancy and lease agreements that are above 21 years.
According to him, tenancy and lease agreements less than seven years would carry 0.78 percent stamp duty while agreements between seven and 21 years will carry a three percent charge.
Nami urged Nigerians to accept the fact that the country can no longer rely solely on crude revenue to fund the budget, hence the need to embrace taxation as the new normal of national fiscal policy.
Giving further breakdown, the agency in a statement wrote;
Please note that Stamp Duties rate on Rent/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.
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 does not exceed 7years–39Kobo or 0.78%; exceeds 7years and doesn’t exceed 21yrs–N1.50Kobo or 3%; above 21yrs– N3.00 (or 6%).
It added;
We make this clarification following enquiries by taxpayers and to clarify that Stamp Duties rate on Rent/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/Lease Agreement is between 1 year and 7years, Stamp Duties rate is 0.78% of the sum. If the duration of the Agreement is above 7years but not above 21 yrs, 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.
