The Federal Government has dismissed claims that a 25% tax has been imposed on building materials under the Nigeria Tax Act 2025.
According to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, the Act has already taken effect and does not introduce a 25% tax on construction funds, bank balances, or business expenses.
In a statement responding to a viral video, the committee described the claims as false. The video alleged that the new tax laws would only begin in 2027 and would introduce major levies on construction-related transactions. The committee clarified that both assertions are incorrect.
It emphasized that the Nigeria Tax Act 2025 does not place a 25% tax on building materials, construction funds, or money held in bank accounts. Instead, the law includes measures aimed at reducing the cost of housing, rent, and real estate development.
Key housing and construction reliefs
The committee explained that land and buildings are now exempt from Value Added Tax (VAT) under Section 185(l). Contractors are also allowed to recover VAT on assets and overhead costs where VAT applies to materials or services, thereby lowering overall construction expenses.
Additionally, the Withholding Tax rate on construction contracts has been reduced to 2%, helping developers maintain better cash flow. Individuals building owner-occupied homes can now deduct mortgage interest from their taxes. Property owners earning rental income are also permitted to deduct expenses such as repairs, insurance, and agency fees.
Support for renters
The Act provides rent relief of up to ₦500,000, representing 20% of annual rent, which is expected to increase disposable income for low-income earners. Rent is fully exempt from VAT, and lease agreements below ₦10 million per year, or 10 times the annual minimum wage, are exempt from stamp duty.
Incentives for investors
Individuals are exempt from Capital Gains Tax when selling a dwelling house or interest in one. Real Estate Investment Trusts (REITs) are also exempt from Companies Income Tax if they distribute at least 75% of dividends or rental income within 12 months after the financial year ends.
Manufacturers of building materials such as iron, steel, and domestic appliances may qualify for tax holidays of up to 10 years under the economic development incentive scheme. Large businesses may also see Companies Income Tax reduced from 30% to 25%.
Relief for workers and small businesses
The Act limits the taxable value of employer-provided accommodation to a maximum of 20% of an employee’s annual gross income, excluding rental value. Small companies that qualify will pay 0% Companies Income Tax, are exempt from charging VAT, and are not required to deduct Withholding Tax from invoices and payments.
Clarification on what the law does not include
The committee firmly stated that the Act does not tax money in bank accounts, does not impose taxes on transfers for purchasing building materials, does not introduce a 25% construction or business cost tax, and does not postpone implementation until 2027.
It described claims suggesting otherwise as misleading and urged Nigerians to rely on verified information. According to the committee, the new tax laws are intended to make housing more affordable and reduce rent, not increase it.
Post A Comment: