The Federal Government of Nigeria has dismissed reports suggesting that the Nigeria Tax Act 2025 introduces a 25 percent tax on building materials, construction funding, or personal bank balances, describing the claims as misleading.
The clarification was issued by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, in a statement shared via X. He was responding to comments made by former Minister of Transportation, Rotimi Amaechi, who had warned during a public event that the law would impose heavy financial burdens and worsen economic conditions if the All Progressives Congress remains in power beyond the 2027 elections.
Amaechi had alleged that payments for construction materials would attract an automatic 25 percent deduction and suggested landlords would pass the added cost on to tenants through higher rents.
Oyedele rejected those assertions, stating that the law neither introduces such a levy nor postpones implementation until 2027 as claimed. According to him, the legislation is already in force and is structured to lower housing and real estate costs rather than increase them.
He explained that land and buildings are exempt from Value Added Tax, while contractors can reclaim VAT on eligible inputs such as materials, equipment, and overheads. A reduced withholding tax rate of 2 percent now applies to construction contracts, a move intended to ease cash flow pressures in the sector.
The law also allows individuals developing owner occupied homes to deduct mortgage interest from their taxes. Property owners earning rental income may claim deductions for maintenance, insurance, and agency related expenses, further reducing the tax burden tied to residential property.
To support tenants, the Act introduces rent relief of up to ₦500,000 capped at 20 percent of annual rent. Rental payments are not subject to VAT, and lease agreements below ₦10 million annually or below ten times the national minimum wage are exempt from stamp duty.
Additional incentives are targeted at investors and developers. Individuals selling a residential property are exempt from Capital Gains Tax, while Real Estate Investment Trusts enjoy Companies Income Tax exemptions if they distribute at least 75 percent of income within a year. Manufacturers producing building materials such as iron, steel, and home appliances may qualify for tax incentives for up to ten years under priority sector programs.
Large companies may also see their corporate tax rate reduced from 30 percent to 25 percent, while small businesses benefit from zero Companies Income Tax, exemption from charging VAT, and no withholding tax deductions on their invoices.
Oyedele emphasized that the law does not impose taxes on bank balances, transfers used to purchase construction materials, or general business expenses. He urged the public to verify claims about the reform against the actual legal provisions rather than relying on viral interpretations.
He concluded that the reforms are designed to make housing more accessible and affordable while encouraging development and removing tax barriers, not creating new ones.
