‘FCT taxation of properties is backed by constitution’

How legal is the recent taxation of properties in the FCT? There are three levels of governments, federal, state and local governments, and each level has its own kind of levy that it imposes according to the Nigerian constitution. With regards to LGs I think you are referring to tenement rates which is what is […]

How legal is the recent taxation of properties in the FCT?

There are three levels of governments, federal, state and local governments, and each level has its own kind of levy that it imposes according to the Nigerian constitution. With regards to LGs I think you are referring to tenement rates which is what is happening in the FCT presently, the area council in the case of FCT is Abuja Municipal Area Council AMAC, and schedule 4 of the Nigerian Constitution empowers the LGs to impose tenement rates on properties within its jurisdiction as may be prescribed by the local governments. In the case of FCT it would be the National Assembly that legislates for it.

What about recent notices sent by Federal Inland Revenue Services FIRS to property owners in FCT, is it any different?

There are two different things, I have mentioned the levels of government, and each has its kind of tax that it may wish to apply. For the federal government, the FIRS is not taxing properties per se, rather on incomes of corporate entities in the FCT, not on individuals. The reason is this, most individuals have properties in their portfolios and incomes from such properties are the ones that are taxable. So it is company tax.

Are industries etc also classified under commercial purposes?

Yes, a company is licensed to run different things, could be schools, etc., some are building housing estates and are selling. Most of these developers who built houses in Abuja have not paid their taxes to the federal government, in fact there are some if you look at their allocation letter they will ask you to pay VAT and when you pay they still don’t remit that to federal government.

But are  these taxes  legal?

Well, FIRS is a legal entity and all incomes from incorporated companies are supposed to be taxed by FIRS so there is legal constitutional backing.

Any exemptions?

I wouldn’t know, but naturally some NGOs , non-profit organisations, diplomatic houses, religious, etc. these are supposed to be exemptions.

How affordable are these taxes?

At the risk of holding forth for FIRS, I can tell you that these taxes are based on income, I’ve mentioned the case of companies collecting VAT yet refusing to remit to the federal government, that is even criminal, so it is not based on income that is not earned, it is based on earned income, so there is no question of capacity to pay again. 

Since you became chairman of estate surveyors and valuers in FCT what have been your challenges?

The real estate market is a sub set of the general economy and in the FCT I can confirm to you that most businesses are real estate related and the situation now is a little bit dull and you ask why is it so, it is because the general economy itself is in recession but we are sure that one day the economy will bounce back and the real estate market is the only sure market that will hedge investment against recession because the market responds positively to the economy.

However in the FCT now you find out that the lands department that is in charge of regulating land transactions in Abuja are not really active, there are no new transactions, mortgages are not really active, deeds of attorneys are not registered so also power of attorneys, so there is a kind of lull, even in administration, and conversely it affects the property market because until there are transactions between vendors you don’t have money circulating and increases the recession. Assuming the FCTA is signing documents, allocating new lands, believe me we will not be feeling this so much. These are the small things that need to be in place and they have to be done right for us to get out of the recession.

What about issues regarding acquisition and compensation in FCT?

Compensation is really a big problem for the FCT, acquisition and compensation has been a major problem. It is expensive to relocate people, there are so many districts that have been allocated but you have so many indigenes on those lands because they have not been resettled or compensated so it is a very big issue, government has to look for alternative ways of resolving resettlement issues.

Any suggestions?

For me as an individual I would advocate for a private sector driven approach to the resettlement programme. It is easy for an individual to assess an indigene or original inhabitant, and offer to resettle them, the people will accept. If FCDA allocates that land to me, I will go and assess, pay him and he moves, many accept this on private arrangement, but if it is the government that is doing it it becomes a problem.

The average inhabitant of Abuja is not against resettlement but it is the way it is being handled by the government that is not acceptable to him. So if we have privately sector driven resettlement programme we should have entities whose job is to carry out resettlement programme and the land owners should be able to pay the cost of those programmes, not waiting for the government because there is no money again. So for the problem of resettlement and compensation in the FCT to be over,  the private sector must be involved actively.