The Presidential Fiscal Policy and Tax Reforms Committee has moved to clarify misconceptions surrounding the newly enacted Nigeria Tax Act 2025, debunking viral claims of a massive 25% tax on building materials and bank funds.
In a statement released to address growing concerns, a video was recently posted on social media, the Committee confirmed that the Act has already commenced and, contrary to the rumors, contains no provisions for a 2027 delay or a 25% levy on construction expenses.
“The Nigeria Tax Act 2025 has already commenced and does not impose a 25% tax on construction funds, bank balances, or business expenses,” the Committee stated. “Contrary to the misinformation seeking to create fear, panic, and disaffection, the law contains provisions specifically designed to reduce the cost of housing, rent, and real estate development.”
Slashing Costs for Developers and Homeowners
The Committee outlined several key pillars of the new law aimed at making the Nigerian housing market more accessible. Central to these reforms is the explicit exemption of land and buildings from Value Added Tax (VAT).
Furthermore, the Act introduces Input VAT Credits, allowing contractors to recover VAT paid on materials and overheads, effectively lowering the total cost of construction projects. To further ease cash flow for developers, the Withholding Tax (WHT) on construction contracts has been slashed to 2%.
For individual homeowners, the Act provides a significant boost by making mortgage interest tax-deductible for owner-occupied residential properties.
Direct Relief for Tenants and Low-Income Earners
The 2025 Act also shifts its focus toward the millions of Nigerians currently paying rent. Key highlights include, Rent Relief where individuals can now claim tax relief on up to ₦500,000 (or 20% of their annual rent), a move intended to increase the disposable income of low-income earners, Stamp Duty Exemptions, lease agreements with an annual value below ₦10,000,000 are now exempt from stamp duty, and VAT-Free Rent where the law reaffirms that rental payments are fully exempt from VAT.
Incentivizing the Real Estate Sector
To stimulate investment, the government has introduced a Capital Gains Tax (CGT) exemption for individuals selling their primary dwellings. Additionally, Real Estate Investment Trusts (REITs) will enjoy exemptions from Companies Income Tax (CIT) provided they distribute at least 75% of their dividends within a specified timeframe.
Small-scale contractors and suppliers are also set to benefit, with Small Company Relief offering 0% Companies Income Tax and exemptions from VAT and Withholding Tax.
Fact Not Fear
The Committee urged the public to remain vigilant against misinformation, emphasizing that the law does not tax bank balances or transfers for building materials.
“Fact Not Fear; evidence beats emotion,” the Committee concluded. “With the new tax laws, housing should become more affordable, and rent should go down, NOT up!”
