The Nigeria Tax Act 2025 has officially commenced and does not introduce any 25 percent tax on building materials, construction funds, bank balances, or business transactions, contrary to viral claims circulating online. Authorities say the law is designed to reduce housing costs, support real estate development, and provide tax relief for renters, small businesses, and investors.
According to Mediaplusng.com, a statement signed by the Presidential Fiscal Policy and Tax Reforms Committee dismisses as false a recent video alleging that the new tax regime will only take effect in 2027 and will impose a 25 percent levy on funds used for building materials. The committee describes the claims as misinformation capable of creating unnecessary panic, fear, and public disaffection.
The clarification states clearly that the Nigeria Tax Act 2025 is already operational and contains no provision imposing a blanket 25 percent tax on construction-related funds, bank deposits, or business expenses. Instead, the Act introduces several fiscal measures aimed at lowering the cost of housing, easing rental burdens, and encouraging private sector participation in property development and manufacturing.
As reported by Mediaplusng.com, the committee outlines key provisions within the Nigeria Tax Act 2025 that directly target housing affordability and economic growth. These include Value Added Tax exemptions on land and buildings, reduced withholding tax rates for construction contracts, mortgage interest deductions, and tax reliefs for tenants.
Lower Cost of Building and Property Development
Under the Act, land and buildings are now specifically exempt from Value Added Tax, a move expected to reduce overall transaction and development costs in the real estate sector. Contractors are also entitled to input VAT credits on materials and services where VAT applies, enabling them to recover certain expenses and lower project costs.
The law further reduces the Withholding Tax rate on construction contracts to two percent, improving cash flow for developers and easing financing pressure. Individuals who take mortgage loans to develop owner-occupied residential houses can deduct interest payments for tax purposes, making home ownership more financially accessible.
According to additional details obtained by Mediaplusng.com, property owners earning rental income can deduct legitimate expenses such as repairs, insurance premiums, and agency fees. These deductions are intended to stabilise rental markets and support sustainable real estate investment.
Direct Relief for Renters and Tenants
The Nigeria Tax Act 2025 also introduces direct benefits for renters. Individuals are eligible to claim rent relief of up to ₦500,000, representing 20 percent of annual rent paid, thereby increasing disposable income for low- and middle-income earners.
Rent on residential property is fully exempt from VAT under the law, reinforcing the policy objective of lowering accommodation costs nationwide. In addition, lease agreements with annual values below ₦10 million, or ten times the annual minimum wage, are exempt from stamp duty, reducing transactional costs for tenants and landlords alike.
Incentives for Investors and Developers
The Act provides targeted incentives to encourage long-term investment in Nigeria’s housing and infrastructure sectors. Individuals disposing of a dwelling house are exempt from Capital Gains Tax, removing an additional financial burden from property transactions.
Real Estate Investment Trusts that distribute at least 75 percent of their dividend or rental income within 12 months of the financial year-end are exempt from Companies Income Tax. The Act also grants priority sector incentives to manufacturers of building materials such as iron, steel, and domestic appliances, with tax exemptions of up to ten years under specific economic development schemes.
Furthermore, the law provides scope for reducing the Companies Income Tax rate for large businesses from 30 percent to 25 percent, enhancing Nigeria’s competitiveness and encouraging industrial expansion.
Protection for Workers and Small Businesses
To protect employees, the taxable value of employer-provided accommodation is capped at a defined percentage of annual gross income. This measure ensures that workers are not overburdened by excessive tax assessments on housing benefits.
Small companies benefit significantly under the Act. Eligible small businesses enjoy zero percent Companies Income Tax, exemption from charging VAT, and relief from Withholding Tax deductions on their invoices. These provisions aim to stimulate entrepreneurship, protect micro and small enterprises, and strengthen Nigeria’s informal and semi-formal sectors.
What the Law Does Not Contain
The Presidential Fiscal Policy and Tax Reforms Committee emphasises that the Nigeria Tax Act 2025 does not tax money held in bank accounts, does not impose a 25 percent levy on building materials, does not introduce a new construction tax, and does not postpone implementation until 2027.
Officials reiterate that any claim suggesting a 25 percent charge on construction funds or bank transfers is unfounded and unsupported by the provisions of the law.
Policy Direction and Economic Impact
Economic analysts say the structure of the Nigeria Tax Act 2025 signals a policy shift toward stimulating housing supply, promoting private investment, and expanding tax fairness. By exempting critical housing inputs and offering reliefs to tenants, the law seeks to address rising accommodation costs and improve affordability across urban and semi-urban areas.
The emphasis on incentives for manufacturers of building materials is also expected to reduce import dependence, boost local production capacity, and generate employment opportunities within Nigeria’s construction value chain.
Stakeholders are encouraged to rely on official documents and verified legal texts when assessing the impact of the new tax regime. Authorities advise citizens to scrutinise alarmist claims and request specific statutory references before accepting assertions about new taxes.
In conclusion, the Nigeria Tax Act 2025 is positioned as a pro-growth fiscal reform that prioritises housing affordability, investment incentives, and small business protection. Claims of a 25 percent tax on building materials or bank funds are false and do not reflect the content of the law.
As policymakers reiterate, facts—not fear—should guide public understanding. Nigerians are urged to consult the law directly and rely on credible information sources when evaluating tax reforms that shape the country’s economic future.
