Let me share with you : Recently, a client of ours in the real estate sector was in the process of acquiring a piece of property in the Lekki axis of Lagos. The purchase price had already been agreed, necessary due diligence investigations conducted at the land registry, and title over the property was certified to be unencumbered. The prospective seller of the property issued his invoice to our client for the sale of the land and included Value Added Tax (VAT) of 7% to the purchase price. Our Client was startled by the inclusion of VAT and requested to know the position of the law on VAT on property transactions.
“Though Nigeria’s VAT rate of 7% pales in comparison to other countries including the United Kingdom which charges 20%, it makes a difference on large transactions such as property and real estate. The Taxman’s interest in these burgeoning property transactions is not surprising as he seeks to generate revenue for the government. But the question that needs to be asked and answered is: is VAT applicable to property and real estate transactions, or are buyers being made to bear an unnecessary unlawful cost? I think the tax increments should be abolished in the real estate sector to enable interested buyers to be able to afford their dream homes.