NIESV to FG: Reverse Stamp Duty Charges On Valuation Reports, Tenancy Agreement
After examining the impact of the new stamp duty tax in the real estate sector, the Nigerian Institution of Estate Surveyors and Valuers (NIESV) has appealed to the Federal government to reverse the charges.
The President of the institution, Sir Emmanuel Wike, who spoke during a press conference in Lagos, said the timing for such increase by the Federal lnland Revenue Service (FIRS) is wrong. “The people are inundated with the coronavirus pandemic and its catastrophic consequences on the economy,” he said.
He said what Nigerians and operators in the sector would rather request from the government is intervention by way of palliatives and financial stimulus packages to cushion the effects of the pandemic as well as stage for a gradual and sustainable recovery of the economy.
Wike explained that housing and property development are already over burdened with multiple taxes that include, building plan fees, governor’s consent fees, capital gain tax, development levy, land use charge, capital transfer tax, withholding tax and Value Added Tax.
The implementation of fresh taxes, he noted will further discourage investments in real estate sector and exacerbate housing shortage in a country requiring about 17 million housing units to meet its shortfall.
He advocated a flat rate stamp duty charge on the category of instruments at a maximum rate of N1, 000. “Stamp duty tax proposed on valuation reports is an aberration, considering the fact that a valuation report offers a financial guide only to would be investors and property owners. It does not fall within the definition of property instrument to be subjected to stamp duty or any tax for that matter.
“If the intention is to give it, legal validity, the professional stamp issued by the regulatory body – Estate Surveyors Registration Board of Nigeria (ESVARBON) takes care of that by statute. “Suffice to say that the ad valorem rate on tenancy and lease agreements and deeds as applied across board is ultra vires.
“Going by judicial precedence, a tax authority cannot rely on a circular to amend a substantive tax statute. Also that information and circular issued by the tax authorities are neither law nor regulation”, he stated.
The institution insisted that it would be counter-productive to execute the new policy. “The professionals will write the FIRS on the need for a reversal of the policy, approach the National Assembly and the Court, if necessary to ensure that it doesn’t scale through.
Wike said government needs to seek the input of housing professionals in its policies before they are made public.
Also speaking, the Chairman, Lagos branch of NIESV, ‘Dotun Bamigbola warned that government shouldn’t increase burden on the people through over taxation, as majority of the state governments already have such policies.
He stated that in any nation, land resource is a key element of wealth creation and implementation of policy must not prevent people from investment in housing.
Bamigbola observed that the new charges will create a setback for transactions, the tenants and lessees. According to him, government’s responsibility is to make life easier for the people in this critical time when all businesses are still trying to find their feet.
He said, “ People should be getting tax breaks for the taxes they have paid in the past. I personally will advice a review and reversal of this policy in the interest of the end users and Nigerians.
“The Stamp Duty directive will have a major impact on the cost of leasing properties; it is an added burden on the property end users or lessees/tenants. This is not encouraging, especially in this economy, which has already stretched finances of the citizenry.”
Source: The Guardian