July 9, 2020

Updated: FIRS introduces stamp duty on rent, C of O among others

Yemisi Okunowo

The Federal Inland Revenue Service (FIRS) in a press release published on July 2nd, 2020, explained that stamp duty will now be paid on rent, Certificate of Occupancy (C of O) as well as other business transaction-related instruments to make the instruments legally binding. 

Stamp duty is charged as either ad Valorem (as a percentage of the consideration of the instrument) or as a fixed sum irrespective of the consideration. 

It was initially believed that the 6% rate was applicable to all rental payments and this led to a large push back. Executive Director, FIRS, Muhammad Nami, however, clarified that the 6% charge is only applicable to tenancy and lease agreements above a typically uncommon 21 years. See the image below for a complete breakdown.

FIRS introduces stamp duty on rent, C of O among others

Speaking on the clarification, Muhammad Nami said:

“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 of the stamp duty 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 ten storey building.”

As the government seeks to increase revenues, reduce the budget deficit and align domestic tax laws with global best practices, the Stamp Duty Act was reintroduced in the Finance Act, 2020 as it previously did not reflect current economic realities. For context, stamp duties were previously charged on receipts with a value of ₦4 and above and did not take electronic transactions into consideration. The Central Bank of Nigeria (CBN) released a directive in November 2019 for banks to charge ₦50 as stamp duty for transactions above ₦10,000 and these actions by the FIRS are ensuring that real estate-related transactions are not left out.

 

 

.

Related Articles

INDUSTRY NEWS

NMRC partners with HouseAfrica.io to implement Nigeria’s first Digital Property Verification & Valuation System

READ MORE
INDUSTRY NEWS

Lagos introduces DropBox facility for land documentation

READ MORE
INDUSTRY NEWS

Photos of your favourite Lagos Office Buildings during and after construction

READ MORE

Access the data you need now

It's free to sign up! Check out reports, the directory and interactive dashboards.

Sign up for free