Tenants to Pay 6% Stamp Duty on Tenancy, Lease Agreements

By Adedapo Adesanya

In line with the latest directive by the Federal Inland Revenue Service (FIRS), tenants will now have to pay six per cent stamp duty on all tenancy and lease agreements.

In a notice to landlords and property agents signed by the tax agency’s Director of Communications and Liaison Department, Mr Abdullahi Ahmad, on Wednesday, it said the funds are expected to be remitted by landlords in order not to run afoul of the Stamp Duty Act.

This simply means that the responsibility of collection and remittance falls on the landlord or agent in charge of the property for lease or rent, while the payment is the duty of the tenants.

“Property-related transactions like tenancy or lease agreement fall under the Ad Valorem category of the stamp duty which attracts six per cent duty payable in percentage of the total value or sum of the tenancy or lease.

“The burden of payment of the six per cent 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,” Mr Ahmad said.

He added that, “The party making the payment shall have the obligation to account for the applicable stamp duties,” indicating that the tenant shall be the one whose name will reflect as the payer of the stamp duty.

Business Post had reported earlier that the FIRS said that stamp duty will be paid on house rent and Certificate of Occupancy (C of O), in line with its new adhesive duty.

Other Stamp Duty types and their rates include Appraisement or Valuation of Property, 5 per cent; Certificate of Occupancy and Partnership, N1,000 flat rate; Gift of Land, 1.5 per cent and Legal Mortgage, 0.375 per cent.

Others include; Legal Mortgage (Upstamping), 0.375 per cent; Deed of Conveyance or Transfer on Sale of Property, 1.5 per cent; Memorandum of Understanding (Related to Land, Sales, Joint Venture, Surrender, Subdivision Agreements, 1.5 per cent; Power of Attorney (Irrevocable/Land Related), 1.5 per cent and Sales Agreement, 1.5 per cent.

The Stamp Duties payment is backed by the Stamp Duties Act (SDA) 1939 as amended by numerous Acts and various resolutions contained in the Laws of the Federation of Nigeria. The SDA also provides a list of documents in its schedule and the duty payable on each.