Zero tax on below N25 million turnover is palliative – FIRS

Malabu Scandal: Nigeria expects $200 million from Netherland and Switzerland
July 29, 2020
Explosion wreaks havoc in Lagos, many feared dead
July 29, 2020

Zero tax on below N25 million turnover is palliative – FIRS

Amid calls by some Nigerians for tax palliatives to be granted to them to cushion the impact of the coronavirus, the Federal Inland Revenue Service (FIRS) said on Tuesday some Nigerians are already enjoying such palliatives.

Following the upward review of the Value Added Tax (VAT) rate early this year and the recent approval of the payment of stamp duty for rents and leases, Nigerians have continued to demand some palliatives to relieve the burden of taxation.

But, speaking as a guest of a radio programme, “The Midday Dialogue” on Nigeria Info FM monitored in Abuja, the FIRS Chairman, Mohammad Nami, said a section of the population has already be granted some form of tax palliatives under the Finance Act.

“The Finance Act 2019 has exempted 60 per cent of taxpayers, including Small and Micro Enterprises (SMEs) from paying tax as only companies which make up to N25 million turnover now pay tax or collect Value Added Tax (VAT).

“This has therefore relieved millions of Nigerians and SMES, including many businesses impacted by COVID-19, of their tax obligations to the government, which is a form of long-term tax palliative to them even before the pandemic,” Mr Nami said.

The FIRS chairman said the global economic downturn occasioned by the coronavirus pandemic has made it necessary for the three tiers of government to close tax loopholes in the country in order to fund the budget and provide needed public infrastructure.

Stamp duty

On the stamp duty payable on tenancy and lease agreement by tenants in the country, Mr Nami warned landlords that its should not be a basis to increase the rent of their tenants.

He also clarified that tenants, “not landlords, should pay the applicable stamp duty by themselves at any commercial bank of their choice, and not to any landlord”.

Mr Nami who spoke as part of his ongoing national public enlightenment campaign on the Stamp Duty Act, said since the responsibility of stamp duty payment was not that of the landlord, “there was no justifiable reason for any landlord to increase rent.”

The stamp duty, he said, is chargeable on the instrument of the transaction, that is, the tenancy or lease agreement or receipt exchanged between the landlords and the tenant, and not the actual rent fee the landlord is collecting from tenants.

“The stamp duty is charged at graduated rates. Stamp duty on rent or lease from one year to less than seven years is 0.78%. If your rent is N100,000, stamp duty due on it is N780.

“Your stamp duty could be as low as N200 or N300 if you live in a room and parlour, or in the village where rent is low.

“If you can afford to pay your rent between seven to 21 years, your stamp duty is 3 per cent on the rent.

“If you can afford to pay rent at once from 21 years and above the stamp duty due is 6 per cent, which is very rare, but we created room for it because some renters prefer long leases,” the FIRS chief said.

He said once a tenant has reached an agreement with his/her landlord on the amount to pay for rent of less than 7 years, “you should calculate 0.78% of the amount”.

That amount of money, he said, should be taken to the nearest bank and deposited in FIRS stamp duty account, after which a teller would be collected and tendered to the landlord to legalise the transaction.

“It is the responsibility of the landlord before he or she issues a receipt, or sign a rent or lease agreement with a tenant to make sure that the tenant presents evidence of stamp duty payment.null

“A landlord that does not insist on evidence of stamp duty payment will bear the cost of the stamp duty if the FIRS eventually finds out.

“You do not pay stamp duty on your own residential accommodation if you are the owner of the property even if you live in a 10-ten storey building,” Mr Nami said.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: