Tax Reform: Developers Send Message to FG on Social Housing, Building Materials

• A group of housing developers in Nigeria have asked the FG to include tax reliefs for them in the Tax Bill
• According to them, the demand for affordable housing is high, and incentives will be required to attract more investors into social housing
• The developers explained how the tax credits to the sector can translate to lower rents

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

A group of housing developers, under the umbrella of the Housing Development Advocacy Network (HDAN), have called on the federal government to include tax relief for building materials and developers of social housing in the Nigeria Tax Bill 2024.

Executive director of the group, Festus Adebayo, noted that incorporating tax reliefs for social housing is key to ensuring that Nigerians get affordable housing.

He explained that the inclusion of low-income housing tax credits in the bill would provide the right incentives for developers to construct or rehabilitate affordable houses for low-income earners in Nigeria.

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In his statement, Adebayo observed that the government should issue the tax credits through tested and competitive processes that would award tax credits to developers who are truly invested in addressing Nigeria’s housing challenges.

A World Bank report earlier shared that about 51.4% of an estimated 224 million Nigerians are multi-dimensionally poor, while 58.8% live in urban slums.

Many stakeholders have stated that this situation calls for urgent investment in basic infrastructure, particularly affordable housing. Hence, they emphasise the need to provide tax relief for developers, The Nation reports.

Tax reliefs for building materials

The HDAN leader noted that the high cost of building materials, land acquisition and foreign exchange volatility pose serious challenges to developers and translate into higher rents.

He described the ongoing tax reforms as an opportunity to address some of the challenges and create a more conducive fiscal environment for developers to provide affordable housing for Nigerians.

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Adebayo also noted that a lot of economic pressures, like high interest rates, make it impossible for the average Nigerian to afford mortgages.

Tax Reform Bill introduces higher taxes

The Nigeria Tax Bill 2024 has been undergoing deliberations in the last few months and is set to be passed into law by the National Assembly.

This bill increased the Value Added Tax (VAT) from 7.5% to 10% immediately, and 15% by 2030. It also introduced several taxes, including a 27.5% Company tax, 4% Development levy, and 5% Excise tax on telecom services and others.

The HDAN leader, in his statement, noted that such policies could discourage further investment in house development if there are no provisions to provide buffers for social housing initiatives.

Adebayo also urged the lawmakers to speed the passing of the 11 mortgage and housing-related bills and review outdated laws like the Land Use Act and Mortgage Bank Act.

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Tax Bill introduces tax on lottery

In related news, Legit.ng reported that the Tax Bill 2024 introduced several new tax provisions. Section 62 and Schedule 10 of the bill proposed a five per cent excise duty on revenue from lottery and gaming trade or business.

Additionally, a five per cent excise duty was imposed on telecom services, including post-paid and prepaid services regulated by the Nigerian Communications Commission (NCC).

The bill also included other critical reforms that were expected to have a significant impact on the business environment in Nigeria.

Proofreading by James Ojo, copy editor at Legit.ng.

Source: Legit.ng