The Presidential Fiscal Policy and Tax Reforms Committee has dismissed reports that the Nigeria Tax Act 2025 imposes a 25 per cent tax on building materials, construction funds, and related bank transactions.

The clarification was contained in a statement issued on Sunday and shared by the committee’s chairman, Taiwo Oyedele, following a viral video by former Minister of Transportation, Rotimi Amaechi.

According to the committee, the new law has already taken effect and does not contain any provision imposing a 25 per cent levy on construction materials, bank balances, or business expenses linked to property development.

The panel described the claims circulating online as false and misleading, stressing that the law is structured to reduce housing costs, stimulate real estate development, and provide relief to tenants and small-scale contractors.

Committee’s Position

The committee directly addressed the statements made in the viral video, saying they were based on inaccurate interpretations of the new tax framework.

It stated that the Nigeria Tax Act 2025 does not impose a 25 per cent charge on construction funds, bank accounts, or business transactions. Officials warned that such misinformation could create unnecessary panic among investors, developers, and the general public.

In the video, Amaechi alleged that payments for building materials would attract a 25 per cent deduction and that the burden would ultimately be transferred to tenants and property buyers. The committee, however, insisted that no such provision exists in the law.

Background to the Debate

The clarification comes amid heightened political commentary ahead of the 2027 general elections, with some public figures raising concerns about potential economic hardship under new fiscal policies.

The committee said the Nigeria Tax Act 2025 forms part of a broader reform agenda aimed at simplifying tax administration, expanding the tax base, and offering targeted incentives to priority sectors, including housing and real estate.

Key Reliefs in the Law

According to the committee, the new tax framework introduces several incentives designed to lower construction and housing costs.

• Land and buildings are exempt from Value Added Tax, reducing acquisition and transaction costs.

• Contractors can recover input VAT on qualifying materials, equipment, and overheads.

• Withholding tax on construction contracts has been reduced to 2 per cent to improve cash flow for developers.

• Individuals building owner-occupied homes can deduct mortgage interest for tax purposes.

• Landlords can deduct repair, insurance, and agency costs before calculating taxable rental income.

The law also includes direct relief for tenants and incentives for investors.

• Rent relief of up to ₦500,000, capped at 20 per cent of annual rent.

• VAT exemption on residential rent.

• Stamp duty relief on qualifying lease agreements.

Effective Date

The committee noted that the Nigeria Tax Act 2025 and related reforms became effective on January 1, 2026, after being signed into law in June 2025. The reforms are expected to provide a new framework for taxation, administration, and revenue generation in the country.

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In its latest Article IV Consultation report, the IMF praised Nigeria’s progress. It noted that the government has restored financial discipline and credibility through decisive policy changes.

Nigeria was added to the FATF grey list in February 2023. This list includes countries under increased monitoring due to weaknesses in their anti-money laundering and counter-terrorism financing systems.

The IMF recognized Nigeria’s efforts to strengthen its AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) framework. However, it stressed the need to address the remaining issues fully to leave the grey list.

Despite recent progress, the IMF highlighted several ongoing challenges. These include inflation, infrastructure deficits, insecurity, and fiscal slippages. Without strong action, these issues could threaten the progress made so far.

The IMF also emphasized key areas for improvement. These include tackling insecurity, cutting red tape, boosting agriculture, improving electricity, and increasing spending on health and education. The Fund said these reforms are vital for making Nigeria’s economy more resilient and inclusive.

One of the report’s highlights was the restoration of the Central Bank of Nigeria’s independence. After years of heavy deficit financing, the Bank has significantly reduced its use of the “Ways and Means” facility. As of April 2025, these advances have dropped by nearly 90%, a move the IMF described as a major step toward proper inflation targeting.

Headline inflation, which once peaked above 40%, fell to 22.9% in May 2025. The IMF noted that the Central Bank is maintaining a tight monetary policy. It encouraged continued vigilance until inflation stabilizes.

The IMF also commended Nigeria’s foreign exchange reforms. The Central Bank, under Governor Olayemi Cardoso, replaced the multiple exchange rate regime with a “willing buyer, willing seller” model. This new system, supported by the B-Match trading platform, has improved transparency and liquidity.

According to the report, Nigeria’s gross and net reserves increased in 2024. A strong current account surplus and better portfolio inflows have also helped. The gap between official and parallel market exchange rates dropped from over 60% to less than 3%. FX inflows reached $6.9 billion in Q1 2025, and reserves rose to $40.9 billion by the end of 2024—enough to cover over eight months of imports.

The IMF also acknowledged reforms in the banking sector. It welcomed the ongoing recapitalization plan, which requires banks to raise their minimum capital by March 2026. This move aims to strengthen the banking system, expand credit access, and support Nigeria’s vision of becoming a $1 trillion economy.

In a statement, CBN Governor Olayemi Cardoso said the IMF’s report reflects the country’s commitment to long-term growth. He added that it confirms Nigeria is regaining economic credibility and laying a foundation for inclusive development.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, also welcomed the report. He said the IMF’s recognition of recent progress shows that the government’s reforms are working. These improvements, he noted, have strengthened fiscal and external positions and boosted investor confidence.

The Finance Ministry also highlighted the recent growth in food production. According to official data, food inflation dropped to 21.4% in May 2025, helping to ease overall inflation pressure.

Despite global economic risks, Edun assured that the government remains proactive. The 2025 budget is focused on protecting reform gains and promoting economic stability.

He emphasized that Nigeria continues to monitor global oil prices and trade trends closely. Responsive policies are being developed to reduce potential risks and maintain momentum for inclusive growth.

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