The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oloyede, has dismissed claims that the Nigeria Tax Act 2025 imposes a 25 per cent tax on building materials or funds meant for construction.
In a clarification issued at the weekend, Oloyede said a viral video circulating on social media wrongly claimed that the new tax laws would only begin in 2027 and that Nigerians would be forced to pay a 25 per cent tax on money used to buy building materials and on other transactions.
According to him, the Nigeria Tax Act 2025 has already commenced and does not introduce any 25 per cent tax on construction funds, bank balances, or business expenses.
“We are aware of a recent video making alarming claims. Contrary to the misinformation seeking to create fear and panic, the Nigeria Tax Act 2025 has already started and does not impose a 25 per cent tax on construction funds or bank accounts,” he stated.
In recent days, many Nigerians have expressed concern over online reports suggesting that the Federal Government planned to introduce heavy taxes on housing and construction. The reports caused anxiety among property developers, contractors, small business owners, and ordinary citizens planning to build or rent homes.
Nigeria is currently facing a housing deficit estimated in the millions of units. The high cost of cement, iron rods, roofing sheets, and other materials has already made building difficult for many families. Rent has also increased sharply in major cities such as Lagos, Abuja, and Port Harcourt.
Because of these challenges, news of a possible 25 per cent tax on building materials sparked fears that housing costs would rise even further.
However, Oloyede said the new tax law was designed to reduce the cost of housing, not increase it.
Explaining the details of the law, Oloyede said several provisions were included to support real estate development, make rent more affordable, and assist small contractors.
One major provision is the exemption of land and buildings from Value Added Tax (VAT). This means that land transactions and property sales are not subject to VAT under the new law.
In addition, rent on residential property is also exempt from VAT. This is expected to reduce the overall tax burden on tenants.
The law also allows contractors to recover VAT paid on certain materials and services as input VAT credits. This measure is designed to lower construction costs by reducing the tax burden on developers.
Another key provision is the reduction of Withholding Tax (WHT) on construction contracts to two per cent. According to the committee, this will help developers manage their cash flow better and reduce financial pressure.
The law also allows individuals building their own homes to deduct mortgage interest from their taxable income. This applies to owner-occupied residential houses and is meant to encourage home ownership.
Property owners who earn rental income can also deduct certain expenses, such as repairs, insurance, and agency fees, before calculating their tax. This reduces the overall tax payable on rental income.
The new tax law also includes measures aimed directly at renters.
Individuals can now claim rent relief of up to ₦500,000, or 20 per cent of their annual rent. This relief is expected to increase the disposable income of low- and middle-income earners.
There is also a stamp duty exemption for lease agreements with an annual value below ₦10 million, or 10 times the annual minimum wage. This measure reduces the cost of formal rental agreements for many Nigerians.
Housing experts say these provisions could ease pressure in the rental market if properly implemented.
Beyond renters and small developers, the law also provides incentives for investors and manufacturers.
Individuals will not pay Capital Gains Tax when selling a dwelling house or an interest in one. This is expected to encourage more people to invest in housing.
Real Estate Investment Trusts (REITs) are also granted tax exemptions on Companies Income Tax if they distribute at least 75 per cent of their dividend or rental income within 12 months after the end of the financial year.
Manufacturers of building materials such as iron, steel, and domestic appliances may qualify for tax exemptions under the economic development incentive scheme for up to 10 years. The aim is to boost local production and reduce reliance on imported materials.
There is also scope for reducing the Companies Income Tax rate for large businesses from 30 per cent to 25 per cent.
The Act places a cap on the taxable value of employer-provided accommodation. The taxable amount is limited to the annual rental value and must not exceed 20 per cent of the employee’s annual gross income, excluding the rental value.
Small companies also enjoy significant relief. Qualified small businesses are subject to zero per cent Companies Income Tax. They are also exempt from charging VAT and are not required to deduct Withholding Tax from invoices and payments.
Oloyede said these measures are meant to protect small suppliers and contractors who play a major role in the housing sector.
The committee stressed that the Act does not tax money in bank accounts. It does not tax transfers for buying building materials. It does not introduce any 25 per cent construction tax. And it does not delay implementation until 2027.
“These claims are not in the law. Nigerians should always ask, ‘Where is it written in the Act?’” Oloyede said.
The clarification comes at a time when misinformation spreads quickly through social media. Analysts say tax reforms often generate fear because many people do not fully understand legal provisions.
Nigeria has been working to reform its tax system to improve revenue collection, reduce dependence on oil income, and create a more business-friendly environment.
The Presidential Fiscal Policy and Tax Reforms Committee was set up to review existing tax laws and recommend changes that will promote economic growth while protecting vulnerable citizens.
Oloyede concluded with a message to Nigerians: “Fact, not fear. Evidence should guide our discussions. The new tax law is meant to make housing more affordable and support economic development.”
If properly implemented, stakeholders say the measures in the Nigeria Tax Act 2025 could help reduce the cost of housing and encourage more investment in the real estate sector.
For now, the committee has urged the public to ignore false claims and rely on official documents and verified information when assessing the impact of the new tax law.
