INTRODUCTION

This article wouldn’t have been put up at a better time than this, to address this issue currently at the front burner, as it affects renters and property owners. It is imperative to separate facts from myths, so as to allay fears in some quarters and also attempt to provide clarifications due to the ambiguity around the FIRS circular and how (Stamp Duty charge) it would be implemented.

Sometime in early July, 2020 when FIRS first made the announce on stamp duty charge on lease/tenancy agreement going forward in Nigeria, some Nigerians had interpreted it to mean going to Nigerian Postal Service (NIPOST) to obtain N50 postage stamp and affix same on the tenancy agreement, while some interpreted the regulation to mean 6% of professional fee for the preparation of the lease/tenancy agreement.

In this article, attempt would be made to answer certain questions, make some clarifications and separate facts from myths

IS STAMP DUTY SAME AS NIPOST POSTAGE STAMP?
No.
FIRS is charged with the collection of stamp duty on behalf of federal government and State IRS for the 36 states and FCT, not NIPOST. Hence the N50 postage stamp is not the same as what is provided in the Stamp Duty Act

 
IS STAMP DUTY ON TENANCY/LEASE AGREEMENT 6% OF PROFESSIONAL FEE?
No
Stamp duty on lease/tenancy agreement is charged ad valorem (i.e. in proportion to the value of the consideration)

WHO/WHAT IS FIRS.
FIRS is the acronym for Federal Inland Revenue Service.
The Federal Inland Revenue Service (FIRS) statutory and administrative mandate is the responsibility for the assessment, collection and accounting of taxes to the Federal Government of Nigeria

WHAT IS STAMP DUTY?
Under the Stamp Duties Act, CAP S8, LFN 2004 (as amended), stamp duty is payable on any agreement executed in Nigeria or relating, whatsoever, to any property situated in or to any matter or thing done in Nigeria. Instruments that are required to be stamped under the Stamp Duties Act must be stamped within 40 days of first execution.

IS THERE ANY LAW ON STAMP DUTY IN NIGERIA?
There is the Stamp Duty Act (SDA) of Nigeria dated 31st December 2003, which can also be cited as Stamp Duties Act, CAP S8, LFN 2004 (as amended)
The act has three parts (Parts 1, 2 and 3) and 118 sections

WHAT DOES THE FINANCE ACT 2019/2020 SAY ABOUT STAMP DUTY?
The finance act 2019 is contained in the Federal Republic of Nigeria official Gazette No.6 of 14th January, 2020 Vol.107 in Government Notice 11. It has its commencement date as 13th Day of January, 2020
The finance Act 2019 has seven parts (Parts 1, to 7) with 57 sections/amendments and citation.
Part VII covers amendments of Stamp Duty Act from sections 52-57

INSTRUMENTS SUBJECT TO STAMP DUTY CHARGE IN NIGERIA
In consonance with the Stamp Duties Act, CAP S8, LFN 2004 (as amended), the following instruments are subject to stamp duty charge  Deed of Assignment, Contract Agreement, Bonds (Mortgage) Memorandum and Articles of Association, (Alteration of memo), Legal Mortgage,  Deeds of Conveyance or Transfer on Sale of Property, Tenancy/Lease and many more as contained in the act

WHY PAY STAMP DUTY ON LEASE AGREEMENT?
If one carefully study the Stamp Duties Act, CAP S8, LFN 2004 (as amended) and particularly part 2 and sections 68 to 71, it is clear that tenancy/lease agreements are required to be charged stamp duty. The challenge is that over the years, the tax authorities, FIRS/IRS may have failed to implement or enforce the law. Now during the pandemic and dwindling income/revenue accruable from sales of crude oil to the country, the FIRS passed a circular for the payment/collection of stamp duty to boost income to the federal and state government.

IS THIS NOT ANOTHER PART OF MULTIPLE TAXATION NIGERIANS ARE COMPLAINING ABOUT? AND WHY MUST I PAY STAMP DUTY?
This depends entirely on the view point.
Paying taxes is part of civic responsibilities and there are various taxes that are imposed on individuals, goods and organizations. Stamp duty is one of those taxes and it should be paid on tenancy/lease agreements but the agencies responsible for collection may have failed to collect over the years or many Nigerians failed to pay

HOW IS STAMP DUTY CALCULATED AND HOW MUCH SHOULD I PAY AS A TENANT?
As stated above, Stamp duty is chargeable either at fixed rates or ad valorem (i.e. in proportion to the value of the consideration), depending on the class of instrument. In the case of tenancy/lease agreements, it falls under ad valorem (i.e. in proportion to the value of the consideration). This implies that whatever rent you pay as a tenant to your landlord, certain percentage of that rent is charged as stamp duty.

WHO IS TO PAY STAMP DUTY?
The liability for payment is on the beneficiary of the service and in this case, it is the tenant.

WHO IS TO COLLECT?
The Director, Communications and Liason Department, FIRS, Mr Abdullahi Ahmad had said the responsibility of collection and remittance fall on the landlord or agent in charge of the property for lease or rent.

WILL I BE PAYING STAMP DUTY ON LEASE AGREEMENT ANNUALLY?
No.
Mr. Femi Oluwaniyi, Coordinating Director, Tax Operations Group of the FIRS told The Nation that stamp duty on rent or lease only applies to new agreements and not to renewals. If you are a sitting tenant and your landlord signs a tenancy agreement with you once, the charge would apply only once, except if a fresh agreement is prepared annually for renewal.

WHAT IF THERE IS NO AGREEMENT BETWEEN ME AND MY LANDLORD, DO I STILL NEED TO PAY? 
If there is no written or electronic agreement and you are a tenant at will or verbal agreement was entered into by the parties (landlord and tenant) you would most likely not pay stamp duty on the tenancy or lease

PENALTIES FOR FAILURE TO COLLECT AND FAILURE TO REMIT
According to FIRS Chairman Mr Muhammad Nami Failure to deduct or remit stamp duties into the Federal or State Stamp Duties Account attracts relevant penalties and interest as stipulated in the Stamp Duties Act, Cap S8, LFN 2004 (as amended)

https://aolmanagementconsult.com.ng/firs-6-stamp-duty-charge-on-tenancy-lease-agreement-how-it-affects-you-as-landlord-or-tenant/

There is a table of worked example of how you can calculate Stamp Duty on your own and not be cheated by your landlord

They should wait for me to pay. Nonsense people. The one landlords and agents are doing isn't enough, FG wants their share too.

SocialJustice:
They should wait for me to pay. Nonsense people. The one landlords and agents are doing isn't enough, FG wants their share too.

The money is not so much if you are to go with 0.78%

please help share this information to Nigerians

Ok..but it must involve payment Sha..check for your Aluminium windows

I will listen to them when they start paying stamp duty on every kobo they are looting

FG and Nami of FIRS are dumbos without any data as per Land ownership in Nigeria, only State Government knows landlord the ones with CofO ,so how exactly will FG determine who owns a land or house


.

Apt

Damnnnnn niggarrr
Isoright

Mad people

Oh I see

Dear lord, build a house for me before the end of this year in Jesus name. Amen

Aolconsult:


The money is not so much if you are to go with 0.78%

Mynd44, Lalasticlala please help share this information to Nigerians

What nonsense are you saying? Crowdfunding for politicians to loot or are you part of those thieves?

0.78% isn't much to you but you will be amazed when you multiply that by number of tenants in Nigeria.

The government will suffer the poor till they can't breathe again

You need start preparing for the revolution

Duhhhh

Na to go build house for cave now o. Buhari wan finish us both on land,sea,air.

We are in this together na

APC Nigerians are waiting for you in 2023.

Aolconsult:


The money is not so much if you are to go with 0.78%

Mynd44, Lalasticlala please help share this information to Nigerians

.
Yea the is not much but at the end of the day the money goes to the hand of some criminals.......

The Yorubas aided in bringing this satanic government to power.

Wow... The government have drafted so many means of milking the citizens yet no tangible and visible development in sight.....!!

Anyways just when you thought you have seen it all in Nigeria, just know someone somwhere has over 3K comments all starting with DammnnN Nigggar!!

Please someone should clarify this stamp duty as it relates to savings account... My bank has been charging me 50 for every debit or credit in my account and calling it stamp duty charge

PAY. Because am staying in the Federal government housing estate, portable water the govt is giving, good security standard or because of stable electricity been provided by the govt.
If

My Landlord and Agent will be smiling by now! Since they are already planning to send some tenants packing and increasing the house rent couple with this government insensitivity to the masses!!

Just another avenue to continue milking the masses dry. E no go better for this government

Aolconsult:


The money is not so much if you are to go with 0.78%

Mynd44, Lalasticlala please help share this information to Nigerians

How will you go with 0.78% when it's not a lease agreement?

Is there any landlord that will sign an agreement of 7 years with you?

LandMann:
Please someone should clarify this stamp duty as it relates to savings account... My bank has been charging me 50 for every debit or credit in my account and calling it stamp duty charge

#50 charge for every Credit you receive into your bank account in excess of #10,000.

MrColdsweat:
The Yorubas aided in bringing this satanic government to power.

keep shut

Honestly, paying the money is not really a problem for majority of Nigerians, but using for the purpose which it was being collected for is what is on most Nigerians mind.


It is better for me to earn 100k and use 80k to pay tax in saner country than Nigeria, which the money would be embezzled and shared among themselves.


God please come and take me away from the country to better European country biko

Nawa o
.
meanwhile I'll design a brand logo and flyers for your business for just 3k

THEY ARE MAD. WHEN I AM STILL OWING SO MUCH.
THIS WILL NEVER WORK

This government should take it easy on the poor masses