FG REFUTES AMAECHI’S ALLEGATION OF 25% LEVY ON BUILDING MATERIALS

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By: Balogun Ibrahim

The Federal Government has dismissed claims that the Nigeria Tax Act 2025 imposes a 25 per cent levy on building materials, construction funds, or bank balances.

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, clarified the matter in a statement posted on X on Sunday, responding to a viral video of former Minister of Transportation Rotimi Amaechi.

In the video, Amaechi warned a crowd of potential economic hardships if the All Progressives Congress retains power in the 2027 elections, saying, “The tax law is if I pay you 100 million Naira for your building materials, automatically 25 million will leave your account.”

“If you are a landlord constructing a house, you will add 25% extra because you cannot bear it alone; the cost will be passed on to the buyer or tenant,” the former minister said.

However, Taiwo Oyedele clarified that claims suggesting the new tax laws would take effect in 2027 and impose a 25 per cent tax on funds for building materials and other transactions were false.

“We are aware of a recent video asserting that the new tax laws will commence in 2027 and alleging a 25% tax on funds for building materials and other transactions,” Oyedele stated.

“Both claims are false. Contrary to the misinformation aimed at creating fear and panic, the Nigeria Tax Act 2025 is already in effect and does not impose a 25% tax on construction funds, bank balances, or business expenses,” Taiwo Oyedele said.

He added, “The Act includes provisions specifically designed to lower the cost of housing, rent, and real estate development.”

Oyedele highlighted key measures in the Act to support affordable housing and promote real estate growth.

Under Section 185(1), land and buildings are exempt from Value Added Tax, while contractors can recover input VAT on materials, assets, and overhead costs where applicable.

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He also noted that construction contracts now benefit from a reduced Withholding Tax rate of 2 per cent, and mortgage interest is tax-deductible for individuals developing owner-occupied residential houses under Section 30(2)(iv).

Property owners earning rental income can also deduct related expenses, including repairs, insurance, and agency fees, under Section 20 of the Act.

On reliefs for renters and tenants, Taiwo Oyedele stated that individuals can claim rent relief of up to ₦500,000, equivalent to 20 per cent of annual rent, under Section 30(2)(vi) of the Act.

He further explained that rent is exempt from VAT and that lease agreements with an annual value below ₦10 million—or 10 times the annual minimum wage—are exempt from stamp duty under Section 134.

Oyedele also highlighted incentives for investors and developers under the Nigeria Tax Act 2025:

Capital Gains Tax Exemption (S.51(1)): Individuals pay no Capital Gains Tax when disposing of a dwelling house or an interest in one.
REIT Incentives (S.162(c)): Real Estate Investment Trusts are exempt from Companies Income Tax when distributing at least 75% of their dividend or rental income within 12 months after the financial year-end.
Priority Sector Incentives: Manufacturing of building materials such as iron, steel, and domestic appliances qualifies for specific tax exemptions under the economic development incentive scheme for up to 10 years.
Reduced Corporate Tax Rate (S.56): Large businesses may benefit from a reduction in Companies Income Tax from 30% to 25%.

He emphasized that the Act provides targeted support for manufacturers of building materials and allows for a reduction in corporate tax rates for large companies, aiming to stimulate investment and growth in the real estate and construction sectors.

Oyedele further stated that small companies would benefit from a zero per cent Companies Income Tax rate, VAT exemptions, and no deduction of Withholding Tax from their invoices and payments.

He emphasized that the Act does not impose taxes on bank account balances, transfers for purchasing building materials, or any 25 per cent tax on construction or business costs.

“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 clarified.

Dismissing the viral claims as false, Oyedele added, “Fact, not fear—evidence beats emotion. If anyone makes an alarming claim or attempts to misinform you, ask them, ‘Where is it in the law?’

“With the new tax laws, housing should become more affordable, and rent should decrease, not increase!”