The Lagos State Governor, Babatunde Fashola, Monday, signed an executive order cutting taxes on land transactions in the state by 10 per cent.
The order, which takes immediate effect, cuts Consent Fees charges from six per cent to 1.5 per cent. Capital Gains tax has been brought down from two per cent to 0.5 per cent.
Other cuts contained in the executive order are reduction of Stamp Duty from two per cent to 0.5 per cent while registration fees was cut from three per cent to 0.5 per cent.
Mr. Fashola said apart from improving the internal land management, the reduction is aimed at ensuring that land transactions in the state are done with minimal difficulties.
“[The order is] to ensure that land transactions are carried out with minimal difficulty especially with difficulties relating to payment of taxes, rates and legitimate levies charged under the enabling law,” the governor said.
He added that reduction is also aimed at attracting and improving investments, which would in return impact positively on the state economy.
“We expect also that if we as government play a role, by reducing a cost of setting up business, we have made a huge impact enabling private enterprise to thrive and in that way hopefully provide employment opportunities to businesses that will be form as the results of this policy intervention,” he said.
The governor said the reduction is a fulfilment of the promise contained in the state’s 2015 budget adding that it “sends the strongest possible signals to any of the investors about where to put money.”
“So, consistently in Lagos the cost of land transactions have come down from 30% or thereabout in Pre- 1999, down to 13% around 2005, and finally now to cumulative total of 3% and I hope that the investing public will respond to this favourably especially local investors because for me local investors are the most important investors”, he said.
He said that the new charges would remove all ambiguity in the land taxes.
“It is also important to bring certainty into this transactions by making the public aware of what their expectations and obligations are. So that people at the beginning of the transactions know what the end to end cost of that transaction is even before they start to make a commitment, so in this way we hope that we would have contributed to the need to help in diversifying the economy and providing the opportunities,” the governor said.
Before now, estate agents and some investors paid the exorbitant cost of land and rent on landed property and the high cost of land transactions in the state.
While land owners and investors may view this development as cheering, these cuts are not expected to herald a reduction in rent or purchase of lands and landed property.