COVID-19 Era: FIRS New Stamp Duty Tax Regime Will Worsen Nigeria Economic- NIESV President
By ABIODUN JIMOH
The Nigerian Institution of Estate Surveyor and Valuer (NIESV) has noted that the introduction of a revised stamp duty tax regime by Federal Inland Revenue Services (FIRS) would only worsen the precarious economic situation of the poor and the citizenry in general.
The Association hereby demanded the rescission of the stamp duty tax regime as recently proclaimed by the FIRS, saying that it would lend itself to being counter productive in the face of the ravaging coronavirus pandemic whose end is highly unpredictable.
NIESV President, ESV Chief Emma Wike declared this in press release made available to Daily Dispatch on Wednesday stating that the FIRS on Monday, July 20, 2020 proclaimed a new Stamp Duty Tax Regime said to flow from its powers under the Stamp Duty Ordinance (now Act) of 1939 as amended. Now cited as CAP S.8 LFN, 2004.
He said: “FIRS stated, inter alia, that its main thrust for the reviewed stamp duty tax was to reposition stamp duty and make it the next major revenue source for Nigeria in the face of dwindling oil revenue.
“It is strange that FIRS, a government agency would at this critical time that the nation is inundated with the coronavirus pandemic and its catastrophic consequences on the Nigerian economy, the health and welfare of its people canvas such a position to justify the extra tax burden on the people.
“The COVID-19 pandemic is currently ravaging the world, infecting the world population in millions and bringing the global economy down its knees. Nigeria is no exception. The lockdown, isolation and social distancing restrictions imposed by government have come with their consequences with the economy in recession and declining gradually into a depression.
“According to the World Bank June 2020 Global Economic Prospects report we might be doomed to face the worst recession in decades. The Federal Government has predicted the pandemic to cause unemployment to rise to 33.6% or that 39.4 million people will lose their jobs.
“Our situation is further compounded by poor health infrastructure, general insecurity arising from Boko Haram insurgency, kidnapping, herdsmen/farmers clashes, corruption and outright brigandage.”
Speaking on the new tax regime, Wine stressed: “According to the breakdown as published a number of land and property instruments, among others will be taxed ad valorem as follows: Tenancy/Lease Agreement, 6 percent; Deed of Assignment, 1.5 percent; Deed of Conveyance, 1.5 percent; Power of Attorney Land related, 1.5 percent; MOU (Land, Joint Venture), 1.5 percent; Appraisal/Valuation Report, 1.5 percent, and Legal Mortgage, 0.375 percent.
“It goes further to entreat that MDAs, landlords and other executors of chargeable transactions are only agents of collection who are to ensure that stamp duties due on each transaction are remitted to government account as when due.
“It is obvious that the introduction of a revised stamp duty tax regime by FIRS will only worsen the precarious economic situation of the poor and the citizenry in general.
“What Nigerians would rather request of government is intervention by way of palliatives and financial stimulus packages to cushion the effects of the pandemic and set the stage for a gradual and sustainable recovery of the economy.
“While property is universally acknowledged as a veritable vehicle for recovery from recession, albeit economic depression, it is a gross anathema to introduce a tax regime that will frustrate land and property transactions and development. What is required of government is incentives, tax cuts and tax holidays, not burdensome taxes.”
Furthermore, he have an instance that in UK, a stamp duty holiday and cut by the Director of the Exchequer, Rishi Sunak, as recent as July 8, 2020, reported a rise in property market transactions by as much as 5% in England and Northern Ireland within a week of its proclamation,
“In the US the Department of Housing and Community Development (DHCD) developed a $6.2 million COVID-19 Housing Assistance Programme (CHAP) to provide rental assistance to low income renters who are in arrears due to the impact of COVID-19 public health emergency.
“In the case of Nigeria, FIRS has displayed so much insensitivity to the plight on the generality of Nigerians battling with the shock effects of the pandemic.
“The imposition of a 6% stamp duty tax across board will no doubt weaken the purchasing power of the citizenry, and further impoverish the masses who are daily labouring to earn a living in the face of the pandemic.
“The UN World Food Programme (WFP) and the FAO admonished that Nigeria among some other countries of the world might soon face devastating level of hunger and food shortages as a consequence of COVID-19 if urgent life saving assistance is not sought for the people before December 2020.
“We must state emphatically that the 1.5% ad valorem charges on Deeds, Power of Attorney and MOU documents which are instruments of physical developments will stifle investments in housing and real estate.
“Housing, and property development are already over burdened with multiple taxes, namely, building plan fees, governor’s consent fees, capital gains tax, development levy, land use charge, capital transfer tax, withholding tax, vat etc.
“Additional ad valorem stamp duty tax will further discourage investment in the real estate sector and exacerbate housing shortage in a country requiring about 17 million housing units to meet its shortfall. We hereby advocate a flat rate stamp duty charge on this category of instruments at a maximum rate of N1,000,” he narrated.
In the same vein, on valuation report, the president emphasised that the stamp duty tax proposed on valuation reports was an aberration considering the fact that a valuation report offers a financial guide only to would be investors and property owners and does not fall within the definition of property instrument to be subject for stamp duty or any tax for that matter.
Adding that if the intention was to give it legal validity the professional stamp issued by the Regulatory Body ESVARBON takes care of that by statute.
“It is not our intention to labour on the issue of the legality or otherwise of the new stamp duty tax regime, but suffice it to say that the ad valorem rate on tenancy and lease agreements and deeds as applied across board is ultra vires the Stamp Duty Act CAP S8, LFN (2004) as amended; as it did not take cognisance of the graduated rates as provided in the Schedule to the Act, and the provisions of Sections 68, 70 and 71 of the extant law.
“And going by judicial precedence, a Tax Authority can not rely on a circular to amend a substantive tax statute.. Also that information, circulars issued by tax authorities are neither law nor regulation.
“In conclusion, COVID-19 pandemic since its advent into our geographical space in February 2020, has impacted negatively on the social and economic lives of the citizenry and that of the nation at large leading to dwindling incomes, loss of jobs, upsurge in unemployment and a significant fall in GDP and national earnings.
“To shore up the economy, developed nations are offering palliatives by way of cheque handouts to categories of their citizenry (like the initial $1,200 by USA with a second tranche disbursement in contemplation) and intervention stimulus packages to corporate concerns in the key sectors to rejig the economy.
“We have not been so privileged as a nation but the least to expect from government is a compassionate tax regime away from the life threatening burden of stamp duty and multiple taxation.
“Consequently we demand the rescission of the stamp duty tax regime as recently proclaimed by the FIRS as it lends itself to being counter productive in the face of the ravaging coronavirus pandemic whose end is highly unpredictable.
“Land property and real estate are veritable tools for economic recovery from a depression. We should as a nation take advantage of this factor of production to escape recession and steer the country onto a path of economic sustainability and development. And not kill the goose destined to lay the golden egg with a debilitating stamp duty regime,” he concluded.
