- July 28, 2020
- Posted by: Ijeoma
- Category: E&W ARTICLES
The Federal Inland Revenue Service (FIRS) has clarified that the stamp duty payable on rent or lease agreement for a period below seven years is 0.78 per cent.
This became necessary owing to controversy that has trailed the new stamp duty policy on rent and lease agreements as well as the level of uncertainty created by members of the public as the public notice was not in consonance with the provisions of the Stamp Duties Act. The FIRS stated that the 6% initially state did not apply to all rent/lease agreement, and further broke down the rates in its clarification.
The Stamp Duties rate on Rent/Lease will be advanced depending on the number of years in the Agreement as follows:
- 1-7 years is 0.78%;
- Above 7 to 21 years is 3%;
- Above 21 years is 6%,”
What this means is that the 6% stamp duty is for tenancy above 21years, while 7 to 21 years tenancy attracts 3% and less than 7 years tenancy is below 1% (0.78%).
Furthermore, the Coordinating Director, Tax Operations Group of the FIRS, Femi Oluwaniyi, further explained that the stamp duty on rent or lease only applies to new agreements and not to renewals. This means that if a new agreement different from the initial one is drawn up at renewal, that document should be stamped, just like initial agreement. If, however, the renewal terms are already in the initial agreement, such that no new document is prepared, but just payment of the rent for renewal, then no stamping will be required.
This new development goes to show that even government is fully aware when a particular law made has the character of oppression and would do their bit to see that laws made play the key role of regulation and order outside the context of oppression.