FIRS clarifies stamp duty, reiterates 0.78%, plans palliatives for tenants – Nami

Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, has assured tenants across the country that the Service is working on a stamp duty palliative package for them in view of the current economic realities occasioned by COVID-19.
Recall that the Nigeria Labour Congress (NLC) opposed plans by the FIRS to charge a 6% tenancy and lease stamp duty agreement in the country, urging the federal government to rescind it.
But the FIRS immediately came out to clarify the figures first put out.
But on Monday, Mr. Nami during a live appearance on the popular morning show, “Your View”, on TV Continental (TVC) via video link, according to a statement by Director, Communications and Liaison Department, FIRS, Abdullahi Ismaila Ahmad said that as part of the palliatives stamp duty will not be collected in arrears from tenants, even as he told his interviewers that “there is never a time when taxation is convenient for everybody to pay” and enjoined Nigerians to embrace tax payment “as a patriotic duty to our dear country, Nigeria.”
The Executive Chairman stated that the FIRS was aware that many taxable Nigerians and businesses in the country were going through difficulties imposed on all of us by COVID-19, hence the FIRS has consistently rolled out tax-related palliatives to relieve them of their tax liabilities since the pandemic shut down the Nigerian and global economy.
Mr. Nami stressed that contrary to some false claims in certain quarters, stamp duty was not a creation of the current administration of President Muhammadu Buhari or the current leadership of the FIRS.
He said: “Stamp Duty dates back to colonial times in Nigeria. It has been a form of tax in Nigeria as far back as 1939 when you and I were not yet born. It was codified in our laws in 1953, that is before independence. It was consolidated in 2002, published in 2006 and further reworked into the Stamp Duty Act 2004.”
He continued: “The Joint Tax Board (JTB) where states are represented consider it necessary to bring the stamp duty act to the attention of Nigerians following the recent launch of the Inter-Ministerial Committee on Audit and Recovery of Back Years Stamp Duties where the new FIRS Adhesive Stamp Duty was unveiled. As chairman of the JTB, the FIRS was mandated to enlighten Nigerians on stamp duty. That’s why the FIRS published a clarification notice on the stamp duty and we shall continue to educate the public on it.
“Again, for purpose of clarity, the 6% stamp duty rate is not chargeable across board. It is only chargeable on rent or lease agreement of above 21 years. If your rent or lease is between 7 and 21 years, the stamp duty rate is 3%. And if you pay your rent monthly or yearly, that is less than 7 years, your stamp duty rate is 0.78%. The 0.78% is the rate for most tenants like you and I who live in Suleja or Minna. If your rent is N100,000 like you said, you only pay 0.78%, which is marginal. Of course those who live in Maitama who pay N10 million as rent will pay more at the same 0.78% because their rent is higher than our own in other parts of Abuja.”
Mr. Nami allayed the fear that stamp duty would lead to rent increase, saying: “Stamp duty should not make any landlord to increase his or her rent because it is not paid by the landlord. Landlords are not our collecting agents. It is the responsibility of the tenant to pay stamp duty and you don’t have to give it to your landlord. As a tenant, calculate 0.78% of your rent and pay that fraction at the FIRS office nearer to you or at your bank. You should then fix the stamp duty imprimatur on the tenancy agreement before you sign it with your landlord. It is as simple as that.”
Recall that at the weekend, Coordinating Director, Tax Operations Group, FIRS, Mr. Femi Oluwaniyi, stated that “the FIRS stamp duty on rent or lease only applies to new agreements and not to renewals. If a new agreement is drawn up at renewal, that document should be stamped, just like initial agreement. If, however, the renewal terms are already in the initial agreement such that no new document is prepared but just payment of the rent for renewal, then no stamping is required.”
The NLC President, Mr Ayuba Wabba, in a statement last Saturday in Abuja said: “It is also alarming that we are having hike in taxes and user access fees when other countries are offering palliatives to their citizens.
“We call on the Federal Government and the Federal Inland Revenue Service to rescind this harsh fiscal measure as it is boldly insensitive to the material condition of Nigerians which has been compounded by the Covid-19.
“Nobody would want to be a tenant if they had alternative. This means that tenants which this new policy targets are some of the most vulnerable people in our society.
“It would be illogical, insensitive and inhuman to churn out laws that make our poor go to bed at night with tears in their eyes….
“Accommodation is a fundamental right guaranteed by Nigeria’s constitution. It is unimaginable that tenants who are in the most vulnerable group would be expected to pay 6 per cent tax for accommodation when sales tax is 1.5 per cent.
“This is indeed a great injustice against the Nigerian poor. Government must take deliberate steps to avoid institutionalizing the widespread belief that it is a crime to be poor in Nigeria.
“We understand that the government needs money to run the business of governance especially at this time of economic challenges all over the world.
“But the answer is not in further exploiting the already exploited. There is no doubt that there are other painless ways of mobilizing funds to deal with the exigency of the times….
“Second, there are thousands of unoccupied houses in different parts of the Federal Capital Territory and indeed many cities in Nigeria belonging to very affluent members of the society.
“As we have always demanded and canvassed, Government should tax such property in order to relieve Nigeria’s daunting housing deficits and to generate the needed funds to run government business.
“While we expect the reversal of the 6 per cent tenancy and lease stamp duty policy, we remind government that its highest responsibility is to ensure the security and welfare of every Nigerian.”