Tax Act 2025: No 25% levy on building materials or bank funds, committee clarifies

The Presidential Fiscal Policy and Tax Reforms Committee has debunked claims that the Nigeria Tax Act introduces a 25 per cent tax on building materials, construction funds or money held in bank accounts.

The committee said this in response to a viral video in which former Rivers State governor Rotimi Amaechi, during a visit to some markets in Abuja, told building materials traders that if the APC wins in 2027, people could face difficulties early next year, claiming that immediately after the election, the party would enforce a tax law under which 25 per cent of any payment for building materials would be automatically deducted from accounts.

According to a statement on Sunday, the committee described the claims as false. The committee noted that the Act has already commenced and contains no provision imposing a 25 per cent tax on construction costs, business expenses, bank balances or transfers for the purchase of building materials.

The committee added that the law introduces a series of incentives aimed at reducing the cost of housing, promoting real estate development and easing the financial burden on renters and small businesses.

“Among the measures highlighted is the exemption of land and buildings from Value Added Tax (VAT), a move expected to lower overall property and housing costs. Contractors are also allowed to recover input VAT on materials and services, while a reduced two per cent withholding tax rate now applies to construction contracts to improve cash flow for developers.

The committee said the Act further provides mortgage interest tax deductions for individuals building owner-occupied homes and allows landlords to deduct legitimate rental-related expenses such as repairs, insurance and agency fees.

It added that for tenants, the law introduces rent relief of up to ₦500,000, representing 20 per cent of annual rent, to increase disposable income. Rent on land and buildings is fully exempt from VAT, and lease agreements valued below ₦10 million per annum are exempt from stamp duty.

The committee also noted that the Act grants capital gains tax exemption on the disposal of dwelling houses, provides tax incentives for Real Estate Investment Trusts (REITs), and offers priority sector incentives for manufacturers of building materials such as iron and steel. It added that there is scope for reducing companies income tax for large firms from 30 per cent to 25 per cent.