The Federal Inland Revenue Service (FIRS) has applied the newly introduced stamp duty to house rent and Certificate of Occupancy (C of O) in line with its new adhesive duty.
The new development was announced on Thursday in Abuja by the FIRS Director, Communications and Liaison Department, Mr. Abdullahi Ahmad.
He said Nigerians should ensure that documents pertaining to rent or lease agreements for their home, offices, C of O and other transactions related to the subject matter should be subjected to authentication with new FIRS Adhesive Stamp Duty.
According to him, the new FIRS Adhesive Stamp Duty came into being at the official inauguration of the Inter-Ministerial Committee on Audit and Recovery of Back Years Stamp Duties recently in Abuja. Therefore, the recent decision of the tax body is necessary to give the instruments of business the force of law and make them legally binding on all parties.
The statement issued earlier by the FIRS Executive Chairman, Mr. Muhammad Nami and was quoted by Mr. Ahmad described the functions of the stamp duty in relations to transactions carried out in housing related businesses.
“Chargeable transactions under the Stamp Duties Act as amended in the Finance Act 2019 are in two categories – Fixed Duty Instruments and Ad-Valorem Instruments.
“The following are the chargeable transactions in the Fixed Duty Instruments category, Power of Attorney (PoA), Certificate of Occupancy (C of O), proxy form; Appointment of Receiver, Memorandum of Understanding (MoU), Joint Ventures Agreements (JVA), Guarantor’s form and Ordinary Agreement Receipts.
“While ad-Valorem Instruments chargeable under the Stamp Duties Act are Deed of Assignment, Sales Agreement, Legal Mortgage or Debentures, Tenancy or Lease Agreement, Insurance policies, Contract Agreements, Vending Agreement, Promissory Notes, Charter-Party and Contract Notes.
“Stamp duty is basically charged in two forms, either ad valorem where duty payable is a percentage of the consideration on an instrument or a fixed sum irrespective of the consideration on a dutiable instrument or document.”
Mr. Ahmad said it has become imperative that transactions related to the instruments contained in the statement bear Stamp Duty. He implored members of the public, on behalf of the Federal Inland Revenue Service, to ensure that any of the Instruments they give or receive in the course of their business or official transactions have the new FIRS Adhesive Stamp Duty affixed or stamped on them as sign of authentication.
This development is following some other moves made by the tax body since the outbreak of coronavirus to increase tax revenue for the federal government.
The FIRS said that the Stamp Duty has generated N66 billion in five months (January to May), which has been remitted into the federation account. N20 billion was generated from Money Deposit Banks (MDBs) while N7.90 billion came from stamping of instruments. The rest of the fund came from businesses across other sectors.
Mr. Nami had on Wednesday attributed the success of the tax revenue to the amended Financial Act 2019, and deployment of technology in administering the stamp duty obligations.
But all these are taking place when the International Monetary Fund (IMF) is warning Nigeria against imposing new tax measures, and urging her to relax her tax policies to reflect the current realities of COVID-19.
The IMF said Nigeria’s economy is expected to shrink to -5.4 percent and would need supportive fiscal policies right now to sustain the downturns induced by the pandemic.
“Our projection of -5.4 percent is contingent on inbuilt policy response and avoiding some of the challenges that were experienced when oil prices declined in 2016 causing GDP to be depressed for an extended period. Subject to a flexible and nimble policy response; we expect that there would be some recovery but this year would be a difficult one for the country,” the IMF said.
Many other countries have been waiving taxes for businesses as a measure to help them stay afloat. The new tax regime introduced by the FIRS would without doubt, increase the burden on businesses and households.
The FIRS Adhesive Stamp Duty is chargeable from payments made, which seems to exempt payers when it comes to rents and lease’s agreement. But it only offers payees the opportunity to increase cost in order to recover the money they would pay for stamp duty charge.
Consequently, there will be a surge in office-space and housing cost, additional burden on businesses and householders who are already striving through the strains of the pandemic.