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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The Nigerian Bar Association (NBA) has called for the immediate suspension of the Tax Reform Act, citing serious controversies surrounding its passage and warning that the issues threaten Nigeria’s democratic and legislative integrity.

In a statement issued on Tuesday by its President, Mazi Afam Osigwe, the NBA expressed deep concern over what it described as procedural irregularities in the enactment of the tax laws, stressing that transparency, accountability, and constitutional compliance must underpin all legislative processes.

According to the association, the circumstances surrounding the passage of the Tax Reform Act have raised questions about the sanctity of lawmaking in a constitutional democracy, especially for legislation with wide-ranging economic and social consequences.

Call for Independent Investigation

The NBA urged authorities to institute a comprehensive, open, and transparent investigation into how the Tax Reform Act was enacted, saying such a step is necessary to restore public trust and confidence in Nigeria’s legislative system.

Pending the outcome of the investigation, the association insisted that all plans to implement the law should be suspended immediately.

Economic and Investor Risks

The lawyers’ body warned that ongoing legal and policy uncertainty surrounding the tax reforms poses significant risks to Nigeria’s economy. According to the NBA, the situation could unsettle the business environment, weaken investor confidence, and create unpredictability for individuals, businesses, and institutions expected to comply with the law.

“Legal and policy uncertainty of this magnitude is inimical to economic stability and should have no place in a system governed by the rule of law,” the statement said.

Rule of Law Must Be Upheld

The NBA stressed that Nigeria’s constitutional democracy requires laws to emerge from processes that are transparent, accountable, and beyond reproach, warning that any deviation undermines public confidence and weakens the foundations of lawful governance.

The association therefore called on relevant authorities to act swiftly to address the controversy surrounding the Tax Reform Act in the interest of constitutional order, economic stability, and the preservation of the rule of law.

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According to Oyedele, while some reforms have begun, much work remains. He emphasized that to strengthen the economy, Nigeria must make deliberate changes in taxation, regulation, and spending. “We still have unfinished business,” he said, noting that key structural changes are needed to attract investments and reduce the cost of doing business.

He pointed out that Nigeria’s current corporate tax rates are too high, especially in an economy facing inflation. High taxes in such an environment, he argued, end up taxing capital instead of profit. He called for a reduction in corporate tax rates to boost business expansion and investment.

Oyedele also urged a review of import tariffs, particularly those applied to raw materials and intermediate goods. These, he explained, are currently much higher than the average in Sub-Saharan Africa. The result is higher input costs, which make Nigerian businesses less competitive. Fixing this, he said, would ease pressure on businesses and have the same effect as a tax break.

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In addition, Oyedele advocated for greater digitalization, especially in government services. Reducing regulatory burdens through digital tools, he said, would improve efficiency and reduce costs for businesses across the country.

He warned that Nigeria’s currency will continue to weaken unless there is alignment between fiscal, monetary, and trade policies. Despite having a trade balance comparable to South Africa and Kenya over the past decade, Nigeria’s naira has lost value six times more than the South African rand or the Kenyan shilling. He used this example to highlight the need for cohesive and consistent economic policies.

Oyedele also advised that businesses which earn revenue in naira should not be required to pay taxes in foreign currencies. He called for a smarter role for government, focused on tasks the private sector cannot do. He stressed the importance of spending that does not fuel inflation and delivers value to citizens.

In closing, Oyedele recommended that Nigeria collect only as much tax as is necessary to meet basic service standards, without discouraging economic growth or investment. According to him, a simplified, efficient, and fair tax system is essential for a stable currency and long-term development.

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