- Beneficiaries bears tax burden
The Federal Inland Revenue Service (FIRS) has ordered all property owners and agents to promptly remit to the service, a six per cent stamp duty charge on all tenancy and lease agreements entered into with all lessees.
Abdullahi Ahmad, director, communications and liaison department of the FIRS, disclosed this in Abuja while explaining that the directive was given so that they would not run afoul of the Stamp Duty Act.
The FIRS had earlier announced that stamp duty will now be paid on Certificate of Occupancy (C of O) and rents, in line with its new adhesive duty. It said the news policy was necessary to give the legal backing to the instruments and make them legally binding on all parties involved in such transactions.
According to Ahmad, property-related transactions like tenancy or lease agreement fell under the Ad Valorem category of the stamp duty, which attracts six per cent duty payable on the total value or sum of the tenancy or lease.
“The burden of payment of the six per cent lies on the beneficiary of the tenancy or lease agreement, whom the Stamp Duty Act identified as the tenant or renter,” the FIRS stated, and added that the duty of collection and remittance of the proposed rate will fall on the landlord or agents in charge of the leased or rented property.
“In any case, the party making the payment shall have the obligation to account for the applicable stamp duties. Some other stamp duty types and their rates are Appraisement or Valuation of Property, 1.5 per cent; Certificate of Occupancy, Partnership N1,000 flat rate; Legal Mortgage, 0.375 per cent, Legal Mortgage (Upstamping) and 0.375 per cent,” said Ahmad.
“Other types include the Deed of Conveyance or Transfer on Sale of Property, 1.5 per cent; Gift of Land, 1.5 per cent Memorandum of Understanding (Related to Land, Sales, Joint Venture, Surrender, Subdivision Agreements, 1.5 per cent; Power of Attorney (Irrevocable/Land Related), 1.5 per cent; and Sales Agreement, 1.5 per cent,” he said.
Who bares the final tax burden?
In recent times, Nigerians have criticised the rate by which rents and agent fees had spiked over the years which has led to some agents demanding up to 50 per cent of the rents or lease as agent and agreement fees. The imposition of a six per cent stamp duty charge on all tenancy and lease agreement will, however, increased the burden borne by the tenants or lessees.
However, the imposition of taxes on individuals and businesses is a source for revenue generation for the government, to aid in the provision of social amenities for the public.
Frontpage August 30, 2017