Tax Act 2025: No 25% levy on building materials — FG replies Amaechi

The Federal Government has dismissed claims that the Nigeria Tax Act 2025 introduces a 25 per cent levy on building materials, construction funds or bank balances, describing the allegation as false and misleading.

The clarification was issued on Sunday by Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, following a viral video in which former Minister of Transportation, Rotimi Amaechi, warned that the new tax law would worsen economic conditions if the ruling party retains power in 2027.

Speaking at a public gathering, Amaechi claimed that payments for building materials would attract an automatic 25 per cent charge, a cost he said would ultimately be passed on to tenants and property buyers.

“The tax law is if I pay you 100 million naira for your building materials, automatically 25 million will leave your account,” he said.
 “If you are a landlord and building a house, you will charge 25 per cent extra because you won’t bear it alone.”

Reacting in a statement shared on X, Oyedele rejected both the claim of a new levy and the suggestion that the tax law would only take effect in 2027.

“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,” he said.
 “Both claims are incorrect.”

According to him, the Nigeria Tax Act 2025 has already taken effect and contains no provision imposing a 25 per cent charge on construction-related transactions.

“Contrary to the misinformation seeking to create fear, panic and disaffection, the Nigeria Tax Act 2025 has already commenced and does not impose a 25% tax on construction funds, bank balances, or business expenses,” Oyedele stated.

He said the legislation was instead structured to ease the cost of housing and encourage investment in the real estate sector.

“Rather, it contains provisions specifically designed to reduce the cost of housing, rent and real estate development,” he added.

Outlining some of the provisions of the law, Oyedele explained that land and buildings are exempt from Value Added Tax, while contractors are allowed to recover input VAT on materials, assets and overheads where VAT applies.

He said construction contracts now attract a reduced withholding tax rate of two per cent, while individuals developing owner-occupied residential buildings can deduct mortgage interest from their taxable income.

Property owners who earn rental income, he noted, are also permitted to deduct expenses such as repairs, insurance and agency fees.

On reliefs available to tenants, Oyedele said individuals are entitled to claim rent relief of up to ₦500,000, representing 20 per cent of their annual rent. He added that rent is exempt from VAT and that certain lease agreements below specified thresholds are exempt from stamp duties.

The committee chairman also listed incentives targeted at investors and developers in the housing and construction value chain.

According to him, individuals are exempt from capital gains tax when disposing of a dwelling house, while Real Estate Investment Trusts are not liable to companies income tax provided they distribute at least 75 per cent of their rental or dividend income within the prescribed period.

He further stated that manufacturers of building materials such as iron, steel and domestic appliances qualify for priority sector incentives of up to 10 years, and that the law provides room for a reduction in companies income tax for large businesses from 30 per cent to 25 per cent.

Oyedele said small companies would also enjoy zero companies income tax, exemption from charging VAT and relief from withholding tax deductions on invoices and payments.

Emphasising that the viral claims were unfounded, he said:
 “The Act does not tax money in bank accounts or bank balances. It does not tax transfers for buying building materials. It does not introduce a 25% construction or business cost tax. It does not delay implementation until 2027.”

He urged Nigerians to verify claims about the law directly from its provisions, adding:
 “Fact, not fear. Evidence beats emotion. If anyone makes an alarming claim, ask them: ‘Where is it in the law?’ With the new tax laws, housing should become more affordable and rent should go down, not up.”

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