The Presidential Fiscal Policy and Tax Reforms Committee has dismissed claims attributed to former Minister of Transportation, Rotimi Amaechi, alleging that the new tax reforms would impose a 25 percent levy on funds used for building materials and other transactions.
In a statement issued on Sunday, the committee clarified that the Nigeria Tax Act 2025 has already commenced and does not contain any provision imposing a 25 percent tax on construction funds, bank balances or business expenses
Amaechi had reportedly suggested in a recent video that the new tax regime would take effect in 2027 and introduce fresh burdens on Nigerians, particularly in the housing and construction sector. The committee described both claims as incorrect and misleading.
According to the statement, the Act neither taxes money held in bank accounts nor imposes a levy on transfers for the purchase of building materials. It also does not introduce any new 25 percent construction or business cost tax.
Instead, the committee said the law contains provisions specifically designed to lower housing costs, stimulate real estate development and provide relief to tenants and small contractors.
Housing and Construction Incentives
Among the key provisions highlighted is the exemption of land, buildings and rent from Value Added Tax under Section 185(l) of the Act. Contractors are also allowed to recover input VAT on assets and overhead costs, a move expected to reduce overall construction expenses.
The Act further introduces a reduced two percent withholding tax rate on construction contracts, aimed at improving developers’ cash flow. Mortgage interest on owner-occupied residential buildings is now tax-deductible, while property owners can deduct legitimate rental expenses such as repairs, insurance and agency fees.
Relief for Renters
For tenants, the law provides rent relief of up to ₦500,000, representing 20 percent of annual rent, to ease pressure on low- and middle-income earners. Lease agreements valued below ₦10 million annually are exempt from stamp duty, while rent itself is VAT-free.
Investor and Manufacturing Incentives
The Act also exempts individuals from Capital Gains Tax on the disposal of a dwelling house and provides tax incentives for Real Estate Investment Trusts that distribute at least 75 percent of their income.
Manufacturers of building materials such as iron, steel and domestic appliances qualify for tax exemptions of up to 10 years under the economic development incentive scheme. In addition, there is scope for reducing Companies Income Tax for large businesses from 30 percent to 25 percent.
Small companies benefit from zero percent Companies Income Tax, exemption from VAT and no withholding tax deductions, while employer-provided accommodation is capped for tax purposes at 20 percent of an employee’s gross income.
The clarification comes amid growing political debate over the broader tax reform agenda, with opposition figures raising concerns about potential economic impacts.
However, the committee maintained that the reforms are structured to make housing more affordable, increase disposable income for renters and strengthen domestic manufacturing.
In its closing remarks, the panel urged Nigerians to verify claims against the actual text of the law.
“If anyone alleges a new 25 percent levy, the burden is simple — show us the clause,” it said.
