Tax Reform Committee Debunks 25% Housing Tax Claim, Says New Law Targets Lower Costs

The committee overseeing the implementation of the Nigeria Tax Act 2025 has dismissed claims that the new law introduces a 25 per cent tax on construction funds, bank balances, or business expenses.

In a statement issued on Sunday, the committee clarified that the Act, which has already taken effect, contains no such provision. Instead, it said the legislation focuses on lowering housing costs, promoting real estate growth, and supporting small businesses and low-income earners.

According to the committee, the law exempts land, buildings, and rent from Value Added Tax (VAT), while also allowing contractors to claim input VAT credits to reduce construction expenses. It further provides a reduced two per cent Withholding Tax rate on construction contracts to ease cash flow challenges for developers.

Renters, the statement noted, can claim tax relief of up to ?500,000—equivalent to 20 per cent of annual rent—while lease agreements valued below ?10 million per year are exempt from stamp duty. Property owners are also permitted to deduct expenses such as repairs and insurance from rental income.

The Act introduces additional incentives for investors, including exemption from Capital Gains Tax on the sale of residential properties and tax benefits for Real Estate Investment Trusts that distribute at least 75 per cent of their annual income. Manufacturers of building materials like iron, steel, and household appliances are eligible for tax exemptions under an economic development incentive scheme for up to 10 years.

Small businesses also stand to benefit from a zero per cent Companies Income Tax rate, exemption from charging VAT, and relief from Withholding Tax deductions.

The committee urged Nigerians to verify information directly from the provisions of the law, warning against misinformation that could create unnecessary alarm. It maintained that the reforms are evidence-based and aimed at making housing more affordable while boosting disposable income.

The committee stressed that reports suggesting new taxes on building materials or bank deposits are inaccurate and misrepresent the intent of the legislation.

In June 2025, President Bola Tinubu signed into law four major tax reform bills passed by the National Assembly. These include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board (Establishment) Bill.

The presidency has stated that the reforms are designed to modernise tax administration, enhance revenue generation, improve the business climate, and attract both domestic and foreign investment.