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Real Estate

Stakeholders Reject Proposed 10% Tax on Commercial Rent in Lagos

The stakeholders made the appeal at a one-day public hearing on “A Bill for a Law to Regulate the Relationship of the Parties Under Tenancy Agreements and Specify the Procedure for the Recovery of Premises in Lagos State and for connected purposes.’’

The public hearing was organised by the House Committee on Housing, chaired by Olanrewaju Layode.

The stakeholders said the 10 per cent being proposed as Deductible Tax, from the gross rent payable to the Lagos State Tax Authority will discourage investment in real estate.

Section 9 of the proposed bill says: “Where a payment for rent becomes due or payable to the landlord, a commercial tenant shall deduct 10 per cent of the gross amount of the rent as tax on the date the rent is paid and immediately pay the amount deducted to the Lagos State tax authority.

“The commercial tenant shall, in addition to the remittance to the Lagos State Tax Authority, render a written account of deducted tax.’’

The stakeholders also advocated that the Lagos State Real Estate Transaction Department (LASRETRAD)  be made a full agency of government; for effective monitoring.

On his part, immediate past president of Nigerian Institution of Estate Surveyors and Valuers, Bolarinde Patunola-Ajayi, urged lawmakers to look into the 10 per cent tax on commercial rent and avoid double taxation as landlords are already paying Withholding Tax on rent.

Patunola-Ajayi, however, noted that the bill has simplified handling of tenancy related-matters and removed a lot of complicated issues, amd called on the lawmakers to make LASRETRAD a full-fledged agency.

He also urged the lawmakers to ensure the proposed law addresses the control of service providers, which he said are estate agents.

“Estate agency is a purely professional service and should be handled by professionals.

“Let the law restrict the professionals that would handle estate agency to be registered estate surveyors and valuers and estate agents registered with LASRETRAD,’’ he added.

Also, Chairman of Ikeja branch of the Nigerian Bar Association (NBA),  Dele Oloke, described the bill as a good development but should be subjected to innovations and amendments.

Oloke said: “The issue of saying commercial rent should pay 10 per cent, I don’t think it will be allowed by the Joint Tax Board because that will become issue of double taxation.

“It will only discourage investment in real estate.

“It is the duty of government to provide shelter. Where that duty is abdicated for investors who take bank loans at commercial rates, you cannot now gag what they do with it or that they should give you part of that money.

“That will be added to their liability to the banks, when they default in paying that loan, the banks pound on their property.

“A lot of foreign funds are in real estate; we should not discourage investors. It is not the best,’’ Oloke said.

A Real Estate Consultant, Mr. Osagie Odiase, said the bill is good

“We want all agents are properly documented and registered in the state.

“We are saying upgrade LASRETRAD to an agency and enforce it (so) that all property owners engage only registered agents so that everybody can be held accountable.

In his overview of the bill, Majority Leader, Sanai Agunbiade, said the proposed law is very rich and makes provision for property recovery.

He said the new law seeks to repeal the 2015 tenancy law.

Source: Sunnews

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