The Presidential Committee on Fiscal Policy and Tax Reforms has clarified that the Nigeria Tax Act 2025 is already in effect and explicitly excludes a 25 percent tax on building materials, construction funds, and bank balances.
In a post on X on Sunday, shared by Taiwo Oyedele, chairman of the committee, the panel said claims suggesting that the new tax framework would deduct 25 percent from payments for building materials or business transactions are incorrect and misrepresent the law.
“We are aware of a recent video claiming that the new tax laws will commence in 2027 and alleging the imposition of a 25% tax on funds for building materials and other transactions. Both claims are incorrect,” the committee said
The clarification was necessitated by comments from Rotimi Amaechi, former minister of transportation, alleging in a viral video that the All Progressives Congress (APC) would implement a tax measure that would automatically deduct 25 percent from payments, including payments for construction materials, after the next election.
Amaechi said the move would raise construction costs and ultimately increase rents and service charges, as landlords and contractors would pass the burden to tenants and consumers.
Countering his claims, the panel said the Act contains no provision introducing a 25 percent construction levy, taxing bank balances, or deducting funds upon payment for materials.
Instead, the committee said the legislation introduces measures designed to lower housing costs, support real estate development and ease cash-flow pressures for businesses.
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‘NIGERIA TAX ACT TARGETS LOWER HOUSING COSTS’
Among the provisions the committee cited is a value-added tax (VAT) exemption on land, buildings and rent.
“By exempting these categories from VAT, the law removes an additional cost layer on property transactions and rental payments,” the post reads.
“Land and buildings are now specifically exempt from Value Added Tax (VAT). Where VAT is chargeable on any materials or service, contractors can now recover VAT on their assets and overhead costs, which lowers overall construction costs.
“A lower 2% WHT rate is applicable on construction contracts, helping to conserve cash flow and reduce financing pressure on developers.”
For individuals, the committee said mortgage interest on owner-occupied residential buildings is now tax-deductible, noting that property owners earning rental income may also deduct expenses such as repairs, insurance, and agency fees.
The panel also said small companies benefit from zero company income tax, exemption from VAT, and no deduction of withholding tax on their invoices.
The group said manufacturing of building materials such as iron and steel qualifies for tax incentives of up to 10 years under the economic development incentive scheme.
The committee said none of the provisions supports claims of a blanket 25 percent tax on construction funds or bank transactions.
“The Act does not tax money in bank accounts or bank balances, tax transfers for buying building materials, introduces a 25% construction or business cost tax, and delays implementation until 2027,” the panel wrote.
“Claims suggesting a new tax on building materials or bank funds are false and misrepresent the law. Rather, the new tax law specifically introduced measures to make housing more affordable, promote real estate development, incentivise manufacturing of building materials, and grant rent reliefs to tenants to enhance their disposable income.”
The committee also said “with the new tax laws, housing should become more affordable and rent should go down, not up
Credit: The Cable
