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Nigeria: Rental income not subject to VAT (tribunal decision)

Nigeria: Rental income not subject to VAT

The Tax Appeal Tribunal, Lagos, issued a judgment holding that rental income derived from the lease of real estate property, whether for residential or commercial purpose, is beyond the scope of the value added tax (VAT) law.


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The case is: Ess-Ay Holdings Ltd. v. Federal Inland Revenue Service (10 September 2020)


The taxpayer—an entity involved in the development of real estate properties that are in turn leased by tenants for commercial and residential purposes—was audited by the Federal Inland Revenue Service (FIRS), and was assessed for VAT on the income derived by the taxpayer from its commercial tenants. 

The taxpayer objected to the assessment, and eventually an appeal was filed with the tribunal.

The tribunal held for the taxpayer, concluding that rent derived from the lease of real property (whether for residential or commercial purposes) is not a supply of goods or services and therefore is not subject to VAT.

Read a September 2020 report [PDF 143 KB] prepared by the KPMG member firm in Nigeria

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