Tax Reform Committee Debunks Claims of 25% Levy on Building Materials and Funds Under Nigeria Tax Act 2025
Officials overseeing Nigeria’s fiscal reforms have clarified that the Nigeria Tax Act 2025 does not impose a 25 percent tax on building materials, construction funds, or bank balances, countering claims circulating in recent public discussions and online videos.
The clarification was issued by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, who stated that misinformation about the law’s provisions has created unnecessary concern among citizens and investors. According to the committee, the tax legislation has already commenced and contains provisions designed to ease housing costs and stimulate real estate development rather than introduce new burdens.
Addressing Misinformation
Recent claims suggested that the tax reforms would begin in 2027 and include a 25 percent levy on funds used for construction or business transactions. Officials described these assertions as inaccurate, emphasizing that the law neither taxes money held in bank accounts nor imposes additional charges on building materials or construction-related transfers.
The committee noted that the Nigeria Tax Act 2025 aims to promote affordability in housing and encourage investment in real estate and infrastructure. Authorities said the provisions were crafted to reduce financial pressure on developers, contractors, and tenants while supporting broader economic growth in Nigeria.
Measures to Support Housing and Construction
Key provisions of the legislation include exemptions and incentives targeted at lowering the cost of building and property ownership. Land and buildings are now exempt from Value Added Tax (VAT), a move expected to reduce overall property development expenses. Contractors can also recover VAT on certain inputs, helping to lower construction costs.
Additionally, a reduced withholding tax rate of two percent has been introduced for construction contracts to improve cash flow for developers. Mortgage interest for owner-occupied homes is tax-deductible, while property owners earning rental income can deduct expenses such as repairs, insurance, and management fees.
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Officials say these measures are intended to stimulate activity in the housing sector by making construction and property ownership more financially viable.
Relief for Tenants and Homeowners
The law also includes direct relief measures for tenants. Individuals can claim tax relief on rent payments up to a specified limit, potentially increasing disposable income for low- and middle-income earners. Rent itself is exempt from VAT, further reducing the financial burden on tenants.
Lease agreements below a defined annual value threshold are also exempt from stamp duties, providing additional savings for renters and property users. Policymakers say these steps are designed to improve housing affordability and reduce pressure in urban rental markets.
Incentives for Investors and Developers
The tax reforms introduce several incentives for investors and developers. Individuals disposing of residential properties are exempt from capital gains tax on such transactions. Real Estate Investment Trusts (REITs) also benefit from tax exemptions on certain income distributions, provided they meet specific conditions.
Manufacturers producing building materials, including iron and steel, may qualify for targeted tax incentives under an economic development scheme that can last up to a decade. The legislation also creates scope for a gradual reduction in corporate tax rates for larger companies, aimed at boosting investment and economic activity.
Small companies and contractors benefit from additional reliefs, including exemptions from certain corporate taxes and VAT obligations, intended to support small business growth and job creation.
Emphasis on Accuracy and Public Understanding
Officials behind the reform stressed the importance of verifying claims about new legislation through official documents and credible sources. They warned that misinformation about tax policies can create confusion and undermine confidence in economic reforms.
According to the committee, the Nigeria Tax Act 2025 represents a policy shift toward encouraging property development, supporting tenants, and strengthening investment in housing and construction sectors. Authorities maintain that the law’s core objective is to reduce costs and improve affordability rather than impose new taxes on building materials or personal funds.
As implementation continues, policymakers say public education and accurate information will be essential to ensure that citizens and businesses fully understand the provisions and benefits of the new tax framework.