- Safiu Kehinde
The Presidential Fiscal Policy and Tax Reforms Committee has debunked claims by former Minister of Transportation, Rotimi Amaechi, who alleged imposition of 25% tax on building materials and construction fund.
Amaechi had on Sunday made the allegation while sensitising a group of building materials traders on the alleged implications of the new tax laws introduced by the President Bola Tinubu-led administration.
The former Rivers governor, in a video of the address on X, alleged that the tax law which he claimed will commence by February 2027 would see the Federal Government deduct 25 percent tax from every transaction linked to construction.
This, according to him, will lead to increase in house rent.
“By February next year, all of you will be in trouble if APC wins. Go and check. There is a tax law. Where is the tax law not implemented? Immediately after election, APC will implement the tax law.
“The tax law is if I pay you N100 million for your building materials, automatically, N25 million will be in their account.
“If you say it is a lie, take my statement to your lawyer. Tell your lawyer ‘Give me the tax law and explain it to me’. I’m a lawyer.
“The moment I come here and you give me building material and you say is 20 million. If I pay you 20 million, Tinubu will collect 2.5.
“If you say it is 500,000, Tinubu will collect 2,500- 25 percent of every payment you get will go to the Federal Government.
“How does it affect everybody? It doesn’t affect you alone.
“If I come and I’m a landlord and I’m building a house, you charge me 25 percent. Because you won’t bear it alone, you will transfer it to the person who brought it.
“I will go and put 25 percent on the rent. If the man who rented it is a doctor, to treat you, he will charge you 25 percent extra.” Amaechi said.
Reacting to claims in a statement issued on Sunday and shared by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, the tax reforms committee declared the claims as incorrect.
It disclosed that the implementation of the tax laws has already commenced while clarifying that no provision of the law imposes a 25% tax on construction funds, bank balances, or business expenses.
“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.
“Both claims are incorrect. 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.
“Instead, it contains provisions specifically designed to reduce the cost of housing, rent and real estate development.” The statement partly read.
The presidency further highlighted key provisions of the Nigeria Tax Act as it affects housing.
“2025 Relevant provisions to make housing more affordable, encourage real estate development, and support small business property contractors and low-income renters include:
“1. ๐ณ๐๐๐๐ ๐ช๐๐๐ ๐๐ ๐ฉ๐๐๐๐ ๐๐๐ ๐๐๐ ๐ท๐๐๐๐๐๐๐ ๐ซ๐๐๐๐๐๐๐๐๐๐ – ๐๐๐ ๐๐น๐ฆ๐ฎ๐ฑ๐ต๐ช๐ฐ๐ฏ ๐ฐ๐ฏ ๐๐ข๐ฏ๐ฅ ๐ข๐ฏ๐ฅ ๐๐ถ๐ช๐ญ๐ฅ๐ช๐ฏ๐จ๐ด (๐.185(๐ญ)): Land and buildings are now specifically exempt from Value Added Tax (VAT). – ๐๐ฏ๐ฑ๐ถ๐ต ๐๐๐ ๐๐ณ๐ฆ๐ฅ๐ช๐ต๐ด ๐ง๐ฐ๐ณ ๐๐ฐ๐ฏ๐ต๐ณ๐ข๐ค๐ต๐ฐ๐ณ๐ด: Where VAT is chargeable on any materials or service, contractors can now recover VAT on their assets and overhead costs, which lowers overall construction costs. – ๐๐ฆ๐ฅ๐ถ๐ค๐ฆ๐ฅ ๐๐ช๐ต๐ฉ๐ฉ๐ฐ๐ญ๐ฅ๐ช๐ฏ๐จ ๐๐ข๐น (๐๐๐): A lower 2% WHT rate is applicable on construction contracts, helping to conserve cash flow and reduce financing pressure on developers. – ๐๐ฐ๐ข๐ฏ ๐๐ฏ๐ต๐ฆ๐ณ๐ฆ๐ด๐ต ๐๐ฆ๐ฅ๐ถ๐ค๐ต๐ช๐ฐ๐ฏ (๐.30(2)(๐ช๐ท)): Mortgage interest is tax-deductible for individuals developing an owner-occupied residential house. – ๐๐ฆ๐ฅ๐ถ๐ค๐ต๐ช๐ฃ๐ญ๐ฆ ๐๐ฆ๐ฏ๐ต๐ข๐ญ ๐๐น๐ฑ๐ฆ๐ฏ๐ด๐ฆ๐ด (๐.20): Property owners who earn rental income can deduct related costs such as repairs, insurance, and agency fees.
“2. ๐ซ๐๐๐๐๐ ๐น๐๐๐๐๐ ๐๐๐ ๐น๐๐๐๐๐๐ ๐๐๐ ๐ป๐๐๐๐๐๐ – ๐๐ฆ๐ฏ๐ต ๐๐ฆ๐ญ๐ช๐ฆ๐ง (๐.30(2)(๐ท๐ช)): Individuals can claim relief up to โฆ500,000 (20% of annual rent), increasing disposable income for low-income earners. – ๐๐๐ ๐๐น๐ฆ๐ฎ๐ฑ๐ต๐ช๐ฐ๐ฏ ๐ฐ๐ฏ ๐๐ฆ๐ฏ๐ต (๐.185(๐ญ)): The VAT exemption on land and buildings also covers rent which is fully exempt from Value Added Tax. – ๐๐ต๐ข๐ฎ๐ฑ ๐๐ถ๐ต๐บ ๐๐ฆ๐ญ๐ช๐ฆ๐ง (๐.134): Lease agreements with an annual value below โฆ10,000,000 (or 10 times the annual minimum wage) are exempt from stamp duty.
“3. ๐ฐ๐๐๐๐๐๐๐๐๐ ๐๐๐ ๐ฐ๐๐๐๐๐๐๐๐ ๐๐๐ ๐ซ๐๐๐๐๐๐๐๐๐ – ๐๐ข๐ฑ๐ช๐ต๐ข๐ญ ๐๐ข๐ช๐ฏ๐ด ๐๐ข๐น ๐๐น๐ฆ๐ฎ๐ฑ๐ต๐ช๐ฐ๐ฏ (๐.51(1)): Individuals pay no Capital Gains Tax (CGT) when disposing of a dwelling house or an interest in one. – ๐๐๐๐ ๐๐ฏ๐ค๐ฆ๐ฏ๐ต๐ช๐ท๐ฆ๐ด (๐.162(๐ค)): Real Estate Investment Trusts (REITs) are exempt from Companies Income Tax (CIT) when distributing at least 75% of their dividend or rental income within 12 months after the financial year-end. – ๐๐ณ๐ช๐ฐ๐ณ๐ช๐ต๐บ ๐๐ฆ๐ค๐ต๐ฐ๐ณ ๐๐ฏ๐ค๐ฆ๐ฏ๐ต๐ช๐ท๐ฆ๐ด: Manufacturing of building materials such as iron, steel, and domestic appliances qualifies for specific tax exemption under the economic development incentive scheme for up to 10 years. – ๐๐ฆ๐ฅ๐ถ๐ค๐ฆ๐ฅ ๐๐ฐ๐ณ๐ฑ๐ฐ๐ณ๐ข๐ต๐ฆ ๐๐ข๐น ๐๐ข๐ต๐ฆ (๐.56): Scope for the reduction of companies income tax rate for large businesses from 30% to 25%.
“4. ๐ท๐๐๐๐๐๐๐๐๐ ๐๐๐ ๐พ๐๐๐๐๐๐ ๐๐๐ ๐บ๐๐๐๐ ๐ฉ๐๐๐๐๐๐๐๐๐ – ๐๐ข๐ฑ ๐ฐ๐ฏ ๐๐ฐ๐ถ๐ด๐ช๐ฏ๐จ ๐๐ฆ๐ฏ๐ฆ๐ง๐ช๐ต ๐๐ข๐น (๐.14(6)): The taxable value of employer-provided accommodation is limited to the annual rental value, subject to a maximum of 20% of the employee’s annual gross employment income, excluding the rental value. – ๐๐ฎ๐ข๐ญ๐ญ ๐๐ฐ๐ฎ๐ฑ๐ข๐ฏ๐บ ๐๐ฆ๐ญ๐ช๐ฆ๐ง: Suppliers and contractors who qualify as small companies benefit from 0% Companies Income Tax (CIT), exemption from charging VAT and no deduction of Withholding Tax (WHT) from their invoices and payments.” The statement read further.
The committee reiterated that the Act does not tax money in bank accounts or bank balances, neither does it tax transfers for buying building materials nor introduce a 25% construction or business cost tax.
It charged Nigerians to challenge whoever made such claim by demanding that such person show where such provision was made in the new tax law.
โFact Not Fear. Evidence beats emotion. If anyone makes an alarming claim or tries to misinform you, ask them, โWhere is it in the law?โ
“With the new tax laws, housing should become more affordable, and rent should go down, NOT up!” The statement added.