Most Nigerians will pay 0.78% stamp duty on rent, not 6% – Tax expert

Stamp duty on most rent agreements in Nigeria is at the rate of 0.78 percent and not 6 percent as being widely circulated, according to Taiwo Oyedele, head of tax at PwC.

The Federal Inland Revenue Service (FIRS) on Wednesday said landlords and property agents should charge 6 percent stamp duty on all tenancy and lease agreements they enter into with all leases and remit same promptly to the Service.

However, Oyedele explained in a tweet that based on the Stamp Duties Act, stamp duty on lease or rent agreement is payable as follows:
If the lease term is less than seven years, stamp duty rate is 0.78 percent (e.g. N780 on N100,000 rent). For a term of 7+ to 21 years, stamp duty rate is 3 percent (meaning N3,000 for N100,000 rent). For a term above 21 years, stamp duty rate is 6 percent (e.g. N6,000 for N100,000 rent).

“Given that most people enter into rent agreements for less than seven years, the applicable stamp duty rate to most people will be 0.78 percent,” Oyedele said.

If you are an individual renting from another individual, he said, your stamp duty is payable to the state tax authority such as Lagos Internal Revenue Service (LIRS) if you are resident in Lagos. If either the tenant or the landlord is a company, then the duty is payable to FIRS.

The obligation to pay stamp duty on rent rests with the tenant. However, FIRS is seeking to appoint the landlord as the agent to collect and remit the tax, Oyedele said.

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