The Federal Inland Revenue Service (FIRS) on Tuesday threw more light on the operation of the stamp duty on tenancy in the country.
According to Muhammad Nami, the FIRS Chairman, the new stamp duty cannot lead to increase in rents or lease agreements, because landlords are not collection agents.
Nami, who spoke on Nigeria Info FM in Abuja, said that tenants would be the ones to remit the applicable stamp duty at any commercial bank of their choice and not to any landlord.
A statement by Abdullahi Ismaila Ahmad, director of FIRS communications and liaison department, quoted Nami to have 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 percent. If your rent is N100,000 stamp duty 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 three percent on the rent. If you can afford to pay rent at once from 21 years and above the stamp duty due is six percent, 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 seven years, you should calculate 0.78 percent of the amount, go to a nearby bank and ask to pay the 0.78 percent 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 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.”
The FIRS boss further stated that the 2019 finance act has already exempted 60 percent of taxpayers, including small and micro enterprises (SMEs) from paying tax because only companies which make up to N25 million turnover now pay tax or collect value-added tax (VAT).
“This 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,” he added.
He further revealed that the COVID-19 pandemic and the resultant economic downturn has made it necessary for the government to close tax loopholes in order to fund the budget, provide needed public infrastructure and meet overhead cost like salary payment at federal, state and local government levels.
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