WHY MANY NIGERIANS WILL NOT PAY 6% STAMP DUTY ON RENT AGREEMENT

On Wednesday, July 22 2020, the Federal Inland Revenue Service – FIRS through its Director, Communications and Liason Department, Abdullahi Ahmad in Abuja announced to the News Agency of Nigeria that the FIRS will now collect 6% stamp duty charge on all tenancy and lease agreements while employing property owners, land lords and their agents as collection channels.

As expected, the news was greeted with much disapproval from Nigerians, especially Twitter users who expressed this through tweets calling on the federal government to reverse the stamp duty charge policy.

I pay tax on my salary. I pay stamp duty on inflows above 10,000. They now want us to be paying 6% stamp duty on rents. Yet the roads they provide us with, will still spoil our cars, generate our own power. This country na pure cruise
— Taiwo Daniel Olutayo (@TDOlutayo) July 23, 2020

BREAKING: We urge President Buhari to immediately reverse the unconstitutional and illegal charge of a 6% stamp duty on tenancy agreements.

This is effectively penalising the poor. The money may be used to line politicians' pockets.

We'll sue if this illegality is not reversed.
— SERAP (@SERAPNigeria) July 25, 2020

Tax expert Taiwo Oyedele through his twitter handle, on Friday however explained the provisions of the stamp duty act on lease or rent agreement as follows:

If the lease term is less than 7 years, stamp duty rate is 0.78% (e.g. N780 on N100k rent)

For a term of 7+ to 21 years, stamp duty rate is 3% (means N3k for N100k rent)

For a term above 21 years, stamp duty rate is 6% (e.g. N6k for N100k rent)
— Taiwo Oyedele (@taiwoyedele) July 24, 2020

Given that many Nigerians do not enter into a lease or rent agreement for more than 7 years, it can thus be inferred that the applicable stamp duty rate is 0.78%. Similarly, one is only expected to pay this charge when they are entering into a new lease or rent agreement but not when they are renewing.

What are your thoughts?

Kindly let us know in the comments.

Author: Juliet Jonathan

Hey there, My name is Juliet Jonathan. I am an O&P graduate, social media manager, creative writer for Right-Vision Premium Consulting Ltd. I am your favourite personal finance coach because I love to talk about money, investments and whatnot. Please stay tuned as I bring you up to date with all you need to know about money matters; personal finance hacks, budgetting, finance trends & investment. You can reach me via e-mail: julietjonathan995@gmail.com, Thanks for reading the blog!