New Tax Law: FG Clarifies Claims of 25% Levy on Building Materials, Bank Savings
- FG says the Nigeria Tax Act 2025 does not impose a 25% tax on building materials, construction funds, or bank balances
- Presidential Fiscal Policy and Tax Reforms Committee also dismissed viral claims that the law will begin in 2027
- Explanation was also provided on the several exemptions and relief included in the new tax law
Legit.ng journalist Dave Ibemere has experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The federal government has denied claims that the Nigeria Tax Act 2025 imposed a 25% tax on building materials, construction funds, or money held in bank accounts.
In a statement issued by Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms on Sunday, February 15 noted that claims circulating in a viral video that the new tax law would take effect in 2027 and introduce fresh levies on funds used for construction and other transactions is false.
Source: Getty Images
The committee said the Act has already commenced and contains no provision imposing a 25% tax on construction costs, business expenses, or bank balances.
According to the statement, the law instead introduces measures aimed at reducing housing costs, encouraging real estate development, and supporting small businesses and renters.
Here are the truths about the new tax law
The committee explained that Key provisions include the exemption of land and buildings from Value Added Tax (VAT), reduced Withholding Tax of 2% on construction contracts, and the ability for contractors to recover input VAT for eligible expenses.
The Act also provides rent relief of up to N500,000 for eligible individuals, exempts rent from VAT, and grants stamp duty relief on certain lease agreements below specified thresholds, Punch reports.
In addition, individuals disposing of a dwelling house are exempt from Capital Gains Tax, while Real Estate Investment Trusts (REITs) enjoy tax incentives when distributing a substantial portion of their income.
The committee stressed that the law does not tax transfers for buying building materials and does not introduce any new 25% construction levy.
Source: Getty Images
It urged Nigerians to verify information against the actual provisions of the law to avoid being misled by unverified claims circulating on social media.
The government maintained that the reforms are designed to make housing more affordable and ease financial pressure on developers, contractors and tenants across the country.
What the Act does not provide
- No 25% tax on building materials or construction funds.
- No tax on bank balances.
- No tax on transfers for purchasing building materials.
- No delayed commencement until 2027.
Simple, legal bank transfer narrations to avoid paying tax
Earlier, Legit.ng reported that Nigerians may need to pay closer attention to the details of their bank transfer narrations as the federal government implement new tax regime
The government has indicated that the reform will leverage digital banking data to enhance tax compliance, making the accuracy of transaction descriptions increasingly important.
Experts warn that vague or misleading narrations could trigger additional scrutiny from tax authorities, potentially leading to audits or penalties.
Proofreading by James Ojo, copy editor at Legit.ng.
Source: Legit.ng
