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Breaking: Tenants in Nigeria to pay 6 percent stamp duty – FIRS

Landlords and property agents have been instructed to charge six percent Stamp Duty on all tenancy and lease agreements by the Federal Inland Revenue Service (FIRS). The directive was given by Abdullahi Ahmad, the Director, Communications, and Liason Department, FIRS on Wednesday in Abuja, July 22, 2020.

Ahmad explained that the directive was given so that they would not run foul of the Stamp Duty Act. He said:

Property-related transactions like tenancy or lease agreement fall under the Ad Valorem category of the stamp duty which attracts six percent duty payable in the percentage of the total value or sum of the tenancy or lease. The burden of payment of the six percent lies on the beneficiary of the tenancy or lease agreement, whom the Stamp Duty Act identified as the tenant or renter. The responsibility of collection and remittance fall on the landlord or agent in charge of the property for lease or rent. 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 percent; Certificate of Occupancy, Partnership N1,000 flat rate; Gift of Land, 1.5 percent Legal Mortgage, 0.375 percent, Legal Mortgage (Upstamping) and 0.375 percent.”.

STAMP DUTY
According to FIRS, below are what you need to know about stamp duties

  • – It is governed by the Stamp Duties Act, CAP S8, LFN 2004 (as amended)
  • – It is administered on written documents only
  • – It is administered by both FIRS, FCT and respective States Internal Revenue

Service(IRS)

  • – FIRS assesses and collects duties on documents executed between a company and an individual, group or body of individuals
  • – FCT and States Internal Revenue Service(IRS) assess and collect duties on documents executed between persons or individuals
  • – A Commissioner of Stamp Duties adjudicates on the amount of duty payable on an instrument (Adjudication is the process of determining the correct amount of duty payable on an instrument)

     Forms of Stamp Duties

    1. Fixed Duties- duties that do not vary with consideration, e.g. duties on the payment receipt, proxy forms, guarantor forms, etc.
    2. Ad-valorem- duties that vary with consideration, e.g. duties on Share Capital, Deed of Assignment, Debenture, Bills of Exchange, etc.
  • – Methods of stamping: Embossing with a die, Affixing adhesive stamp and Affixing postage stamp in lieu of an adhesive stamp
  • – Duties are paid before documents are executed​

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