While the payment of stamp duties on tenancy agreement is not a new provision, the imposition of the new percentage of 6% flat rate is not only foreign to both law and administrative practice, it is also illegal.
SIR: Recently, the Federal Inland Revenue Service announced that the agency will commence the collection of 6% stamp duties on tenancy agreements.
One of the characteristics of taxation is that it is an imposition, it is fixed, certain and backed by law. Going through the provisions of the Stamp Duties Act, section 116 and gives us an understanding of the spirit and intent of the legislation in regards to who can increase, reduce or vary in any way the stamp duties under the Act.
The House of Assembly of a State may by resolution increase, diminish or repeal the duty chargeable under any of the heads specified in the Schedule in respect of documents regarding which the Government of a State is exclusively competent to make laws, and in respect of any other matter within such exclusive competence may add new duties or otherwise add to, vary or revoke the Schedule.
On the current stamp duty levy on tenancy agreement, the schedule to the Act provides three categories of definite lease or tenancy: Below seven years which is rated at 0.39k stamp duties to be paid on every N50; between 7- 21 years which is rated at N1:30k stamp duties to be paid on every N50; and lease of 21 years above, which is rated at N3 stamp duties to be paid on every N50.Simply put, lease tenure of less than seven years lease or tenancy stamp duty payable is 0.
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