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Home Business News Politics

A respected Partner at PWC explains why Stamp duty charge is actually not flat 6%

Chike Olisah by Chike Olisah
July 25, 2020
in Politics, Spotlight
PwC admits 8 Nigerians, 16 others as partners across Africa 

Taiwo Oyedele,PwC Nigeria

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The fiscal policy partner and West African tax leader for PriceWaterhouseCoopers (PWC) Nigeria, Taiwo Oyedele, has revealed that stamp duty on most rent agreements is at the rate of 0.78% and not 6% as being widely circulated.

This was revealed by Oyedele in a statement through some tweet posts on his official Twitter handle. He said that based on the Stamp Duties Act, the stamp duty on lease or rent agreement is payable as follows:

• If the lease term is less than 7 years, stamp duty rate is 0.78% (example N780 on N100,000 rent)

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• For a term of between 7 years and 21 years, stamp duty rate is 3% (that means N3,000 for N100,000 rent)

• For a term that is above 21 years, stamp duty rate is 6% (that means N6,000 for N100,000 rent).

From his tweet post, Oyedele said, “Stamp duty on most rent agreements is at the rate of 0.78%, not 6% as being widely circulated. Based on the Stamp Duties Act, stamp duty on lease or rent agreement is payable 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).”

He pointed out that given that most people enter into rent agreements for less than 7 years, the applicable stamp duty rate to most people will be 0.78%.

He also clarified that an individual who is renting from another individual will pay his stamp duty to the state tax authority where you are resident, whereas if either the tenant or the landlord is a corporate entity, then the stamp duty should be paid to the Federal Inland Revenue Service (FIRS).

Oyedele further revealed that the obligation to pay stamp duty in rent rests with the tenant. However, FIRS is seeking to appoint the landlords as the collection agents, who then remit the tax.

#Tax101 – Stamp duty on most rent agreements is at the rate of 0.78%, not 6% as being widely circulated. Based on the Stamp Duties Act, stamp duty on lease or rent agreement is payable as follows:

Thread

— Taiwo Oyedele (@taiwoyedele) July 24, 2020

FIRS in a tweet post made its own clarification noting that Stamp Duties rate on rent/lease is graduated depending on the number of years in the agreement, which is 0.78% for 1 to 7 years, 3% for 7 to 21 years and 6% for more than 21 years.

FIRS also said that it did not increase the tax rate and will continue to work in collaboration with stakeholders to make taxation the pivot of national development.

Clarification on Stamp Duties Rate for Rent/Lease
Pls note that Stamp Duties rate on Rent/Lease is graduated depending on the number of years in the Agreement: 1-7 years is 0.78%; above 7 years to 21 is 3%; above 21 years is 6%. Note that FIRS DID NOT/ DOES NOT INCREASE tax rate

— Federal Inland Revenue Service NG (@FIRSNigeria) July 25, 2020

Back story

The Federal Government, as part of the measures to raise its revenue level, introduced stamp duty charge for tenancy and lease agreements on properties, with FIRS mandated as the collection agency. This has been a source of concern for some stakeholders and the Nigerian public, as it will increase the financial burden on already suffering Nigerians and businesses.

Nairametrics reported that the Nigerian Labour Congress (NLC), while criticizing the policy said it would cause more hardship for Nigerian workers who form majority of the tenant population. It was also pointed out that introducing hikes in taxes at a time most countries are offering palliatives to its citizens, does not portray the image of a government that is sensitive to the needs of its citizens.


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Tags: PricewaterhouseCoopers PwCStamp duty
Chike Olisah

Chike Olisah

Chike was a banker with over 11 years experience in retail and commercial banking, risk management, treasury portfolio management and relationship management. He also acquired some experience in financial management and do have some special interest in investment analysis and personal finance. He had stints with financial institutions like the former Intercontinental Bank and Fidelity Bank.

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