FIRS explained that the new policy is necessary so as to give the instruments the legal backing required. The Federal Inland Revenue Service (FIRS), as part of measures to reduce disputes in real estate related transactions and generate more revenue, has announced that stamp duty will be paid on house rent and Certificate of Occupancy (C of O), in line with its new adhesive duty.
This was disclosed in a press statement by the FIRS Director for Communication and Liaison Department, Mr. Abdullahi Ahmad, in Abuja, on Thursday July 2, 2020; as reported by the News Agency of Nigeria (NAN). He explained that the new policy is necessary so as to give the instruments the legal backing required, and make them legally binding on all parties involved in such transactions.
Consequently, Ahmad asked Nigerians to ensure that documents that relate to rent and lease agreements for homes or offices, C of O, and other common business-related transaction instruments were authenticated with the new FIRS Adhesive Stamp Duty.
While quoting the Executive Chairman of FIRS, Ahmad said, “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 Venture Agreements (JVA), Guarantor’s form, and Ordinary Agreements 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 dutiable instrument or document.’’
It can be recalled that a few days ago, an Inter-Ministerial Committee on Audit and Recovery of Back Years Stamp Duties was inaugurated; the new FIRS Adhesive Stamp Duty was introduced then. The committee consists of representatives from the FIRS, the CBN, the Federal Ministry of Justice and the Federal Ministry of Finance, Budget and National Planning. The committee is tasked primarily with enforcing those sections of the Stamp Duties Act that empower the Federal Government to recover stamp duties, as well as the accompanying fines and penalties for up to 5 years.
The back-years recovery is targeted mostly at financial institutions like deposit money banks, Nigerian Interbank Settlement System (NIBSS), Central Securities Clearing System (CSCS), and Corporate Affairs Commission (CAC) and so on, in respect of stamp duties already collected but not yet remitted.