If you are a tenant in Nigeria you need to know that there is a new directive in the country as stamp duty will need to be paid by tenants.
The stamp duty will be collected by landlords on behalf of States or Federal Governments as the case may be.
On the avoidance of doubt, the new stamp duty will be paid by tenants, not landlords and it is based on the percentage of their house rents.
The Federal Inland Revenue Service (FIRS) has clarified the categories of stamp duties to be paid by tenants.
But unlike the earlier understanding that it is based on six percent of the rent, it has now been made clear that it is based on the agreement as regards the number of years of the tenancy.
Apart from that, the tenants who are just renewing their payments without any new agreement will not be paying any stamp duty. The stamp duties will only be paid by new tenants with new agreement.
Taiwo Oyedele of PriceWaterhouseCoopers in his twitter account stated that “stamp duty on most rent agreements is at the rate of 0.78%, not 6% as being widely circulated.”
According to Oyedele, “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 noted 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%.”
Tenants who are living in private houses are to remit their stamp duties through their landlords to the State Government. Only tenants paying rents to companies are to remit to the Federal Government.
“if you are an individual renting from another individual, your stamp duty is payable to the state tax authority such as LIRS if you are resident in Lagos. If either the tenant or the landlord is a company, then the duty is payable to FIRS.”, he stated.