The Executive Chairman of FIRS, Muhammad Nami

The Executive Chairman of FIRS, Muhammad Nami

INTERVIEW: Tax is ‘NOT A JOKE’ in Nigeria, Says Country’s Tax Chief


COVID-19 pandemic has impacted negatively on Government’s revenue sources. In June, 2020, the Federation Accounts Allocation Committee (FAAC) shared a total of N696 billion to the three tiers of the Government of Nigeria. FIRS alone contributed 70 percent of the amount shared while other revenue generating Agencies altogether contributed 30 percent. The Executive Chairman of FIRS, Muhammad Nami, in a recent telephone interview with NigeriaInfo (95.1FM) said without revenue from taxes, the Government would be unable to fund her programmes and activities. Nami also clarified why paying Stamp Duty on tenancy agreement should not cause price increase in house rent.


As the Executive Chairman of FIRS, how has your time on the job been so far?

Well, so far, so good. I give glory to God. I am not in a new terrain. Before I was appointed the Executive Chairman of the Federal Inland Revenue Service (FIRS), I had practiced tax for 26 years. So, in the tax terrain, this should be my 27th year. This fact confirms what I have been engaged in since 1991 when I graduated from the University. I started tax practice in 1993, some few months after I completed my National Youth Service. This is the path God has carved for me. Little did I know that I would be talking to you today as the Executive Chairman of the FIRS.

There is this controversy about Stamp Duties. Why is FIRS charging Stamp Duties now?

We are in a period of economic downturn occasioned by the COVID-19 pandemic. However, let me clarify that Stamp Duties is not new in Nigeria. Stamp Duties came into effect in Nigeria as a result of Ordinance 41 of 1939. There have been several amendments to the Stamp Duties law over the years up to the Finance Act of 2019. The most recent amendment recognised technology, e-commerce and cross border transactions in line with global best practices and current economic realities. Stamp Duty is a tax payable in respect of dutiable instrument as provided under the Stamp Duties Act, CAP S8, LFN 2004 (as amended). Such instruments include Agreements, Contracts, Receipts, Memorandum of Understanding (MOU), Promissory notes, Insurance policies and others stipulated in the Schedule to the Stamp Duties Act. What is happening now is that we are looking into the tax laws and implementing the Stamp Duties Act, which is a form of indirect tax that is more viable in the economic situation we find ourselves today. It may interest you to know that the economic situation has increased the Government’s demand for funding.

Muhammad Nami, Nigeria's Tax Chief

Muhammad Nami, Nigeria’s Tax Chief

The Annual target for Stamp Duties that was pegged at N17billion has been revised up to N446billion for FIRS to collect. Please note that this happened before the pandemic. We collected as much as N18 billion in 2019. Presently, the Finance Act, 2019 has taken away 60 percent of our tax base. That is, 60 percent of the people who are supposed to pay Companies Income Tax will not do so. 60 percent of the people who are supposed to act as agents and pay Value Added Tax monthly will also not do so because their annual turnover is not more than N25million. So, a large number of Small and Micro Enterprises in Nigeria today do not pay taxes. What this means is that these companies will no longer act as Agents for collecting VAT. The implication of this is that 60 percent of Nigerian Taxpayers will neither pay VAT nor CIT. Nigerians may note that the Federal Government is so mindful of the Taxpayers that the Finance Act, 2019 was passed long before the COVID-19 lockdown in Nigeria. It seemed that the Government foresaw the pandemic and quickly passed the Act to give the palliatives contained in the Act. Now that our target on Stamp Duties is about 3000% more than the previous years’, we have to inform Taxpayers that Stamp Duties is not only payable at the point of incorporating companies but also on other items that are chargeable. Chargeable items are more than a hundred. This is what we have done. We did not take these decisions from a Communiqué after a Management meeting. This is in the tax law. People keep asking, what is Stamp Duties, what are the rates, who are they paid to? We consulted the tax law to be able to explain and clarify to Nigerians what it is all about.

How is this Stamp Duty on tenancy agreement going to be implemented?

Our Public Notice on Tenancy Agreement captured only the last band which is 6%. It does not mean that it has a flat rate of 6%. It was a publication error and we sincerely apologise for that. The Stamp Duty on Tenancy is charged on a graduated rate, so that if your rent is from one year to seven years, the Stamp Duty payable is 0.78%. This is not up to 1%. The implication of what I have said is that if your rent is N100,000 per annum, the stamp duty due at 0.78% is just N780.00. The second category is the Tenant whose agreement is above 7 years and up to 21 years. If an individual can afford to pay rent for 21 years, the Stamp Duty chargeable is 3%. Such a person is not going to pay rent for a long time, so, 3% is deducted to provide social amenities and fund infrastructure. There are people who would comfortably pay rent for above 21 years; for 22 or 25 years, such people will not go back to their Landlords to pay rent again. Therefore, the law states that such people should pay 6% of the rent as Stamp Duty. That is the information that generated controversy across board. This is another opportunity we have to clarify it.

Is it the Landlord or Tenant who remits the Stamp Duty?

In VAT administration, the service provider collects the VAT component from the consumer. For ease of administration of Stamp Duties, in the case of Individual to Individual agreement, the Tenant is the agent of collection. The Tenant is not expected to pay the Stamp Duty component of rent to the Landlord who is also an individual. What the Tenant is expected to do is, once an agreement is reached with the Landlord or Agent, he takes 0.78 percent of the rent sum to the bank and pays into the Stamp Duties account (for instance, 0.78% of 100,000 is N780.00). The bank gives him a teller or an e-ticket as evidence of payment. The Tenant presents the payment evidence to the Landlord, before he is entitled to the copy of the rental agreement.

For emphasis, the Tenant does not payment to the individual Landlord, he must insist on going to a bank nearby to remit the Stamp Duty element of the rent. It is equally the responsibility of the Landlord to ensure that the Stamp Duty element of the rent is paid to the bank before he issues receipt or a copy of the agreement to the Tenant. The evidence of payment of the Stamp Duty should be made available to him. This decision is taken because if an individual Landlord is asked to collect the money and pay into the Stamp Duty account, some of them can take the money from the Tenants and fail to remit same to the Stamp Duty account in the bank. If a Landlord fails to ensure that the Stamp Duty element is remitted before an agreement is signed, such a Landlord will bear the burden of payment.

If the transaction is between entities or between entities and an individual or a body of individuals, the Landlord is the Agent of collection and should ensure that the Tenant pays to the FIRS account which is a Federation Account. That money is collected and shared among the three tiers of Government. If the rent is between me (an individual) and another individual, the Stamp Duty element will be paid to the State Government where the property is situated. If I am a Tenant living in Suleja, Niger State, the Stamp Duty element of my rent will be paid to the Niger State Stamp Duty account. This has nothing to do with someone who is living in his own house even if it is a ten-storey building. You are not going to pay Stamp Duty on your own house. The essence of it is to legalise the agreement between you and the Landlord.

Where do all these tax monies go to, what is the revenue from Stamp Duties used for?

The responsibility of the FIRS is to assess, collect and account for the taxes it has collected. What happens to the money that has been collected is unknown to me. But the little I can assure you is that the money we collect does not belong to the Federal Government alone. The revenue collected by the FIRS is paid into the Federation Account.

The Federation Account belongs to the three tiers of Government: the Local Government where you come from, the State Government where your colleague comes from and the Federal Government that has its headquarters in Abuja. What happens to such money; for instance, the N18 billion collected as Stamp Duties in 2019, is that, certain percentage of the money is paid to the Local Government, a certain percentage is paid to the State Government and the Federal Government takes the balance. It is possible that out of the N18 billion you made reference to, only about N700 million or less than that goes to the Federal Government. You can be rest assured that the amount is not even enough to pay a department’s salary in a month. And you know the number of Civil Servants we have in Nigeria. You know that we have 774 Local Governments, 36 State Governments and the FCT. It is through this money that the Government provides security, pay Military Personnel who are fighting the Boko Haram. It is through this money that the salaries for Workers in Institutions such as the Civil Defense Corps, the Fire Service are paid. It is through this money that the Government is able to fund infrastructure like the railway that the Government is constructing.

Let me clarify this to Nigerians, at the FAAC meeting of June, 2020, N696 Billion Naira was shared among the three tiers of Government. Each of us comes from one Local Government or the other. Each Local Government takes its share to go and pay their Workers. It is from this money that States decides to build roads, schools and pay salaries. Then the balance is what the Federal Government uses to pay Workers at the Federal Level, pay Contractors at the Federal level and Workers at the National Hospital. However, this is not the information I am trying to pass. Note that out of this N696billion, all other Agencies of Government that generate revenue contributed only 30 percent of the N696billion. The remaining 70 percent came from the FIRS. It is through these taxes that Nigerian Taxpayers are paying through the FIRS that the Government funds the Local Government, State Government and Federal Government to the tune of whatever they get on monthly basis. So, tax is not a joke. Without tax, we would be going nowhere as a country, going forward.

Muhammad Nami, Nigeria's Tax Chief

Muhammad Nami, Nigeria’s Tax Chief

People are complaining of many taxes. Multiple taxation. You go here or there, you are asked to pay taxes. What clarification do you have to make about this?

All over the world, nobody wants to pay tax. There is also a difference between taxes and levies. Taxes are different from the levies you pay in the market or the fine you pay to the VIO. Those monies are not taxes. You are paying those monies for the services the Agencies are rendering to you. Taxes we collect at FIRS are paid to the Federation Account. Anything that you pay to any other agent like VIO that does not go into the Federation Account or State Internal Revenue Account is not tax.

People are afraid that implementation of Stamp Duties may increase House rent. What is the true position?

Stamp Duty on Tenancy agreement does not in any way increase the cost of house rent. The Landlord should not increase your house rent because of Stamp Duty. What you are paying for is just stamping of the rent agreement. If the amount paid as rent is N100,000, the house rent should remain as it is. The only additional payment is just N780.00 which the Tenant should pay by himself to the bank. Tenants should not be cowed into believing that the Government has increased house rent.

Message to the people who are suffering under the burden of taxation.

Tax is assessed based on income. The moment someone does not have an income, that person is not expected to pay tax. The money that accrues to the country from oil and gas sources has diminished. Nigeria now depends more on tax revenue to fund Government activities. Without tax, we will not be able to pay our salaries. Nigerians should know that tax revenue is now more important than ever to fund the activities of the Government. Nigeria is the largest economy in Africa but when it comes to Tax-to-GDP ratio, Nigeria is among the least. Algeria has a Tax-to-GDP as high as 35%, Ghana and Kenya have their tax-to-GDP ratio at 18%. South Africa which is next to Nigeria in terms of the size of the economy, their Tax-to-GDP ratio is about 29%. But when you talk about Nigeria, our Tax to GDP ratio is as low as 6%. The taxpaying culture in Nigeria is very low and we should improve on that for the Government to be able to fund its budgetary requirements.

Editorial Chief, Nigerian Bureau

Kings UBA is a Nigerian journalist and writer. I have reported for major local and international news organisations. I write satire. In 2017, I started contributing stories primarily to Discover Africa News Network. I can be reached on I currently manage Discover Africa News social media handles