By Peter Omopo
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, , has clarified key provisions of the , stating that the law exempts land, buildings and rent from Value Added Tax (VAT).
Speaking amid what he described as widespread misinformation, Oyedele said the Act, which has already come into force, was deliberately designed to make housing more affordable, stimulate property development and ease financial pressures on households and small businesses.
Under the revised tax framework, transactions involving land and completed buildings are fully exempt from VAT. The exemption also applies to both residential and commercial rent, a move Oyedele said is expected to reduce the overall cost of property acquisition and accommodation nationwide.
He explained that while VAT may still apply to certain construction materials and services, developers can now recover VAT paid on assets and overheads through input VAT credits, helping to lower project costs and improve cash flow management.
Oyedele dismissed viral claims suggesting the Act introduces a 25 per cent levy on construction funds, bank balances or general business expenses. Writing on his WhatsApp platform, he stated that the law does not impose any such tax and does not target money held in bank accounts or transfers used for building materials.
“Contrary to the misinformation seeking to create fear, panic and disaffection, the Nigeria Tax Act 2025 has already commenced and does not impose a 25 per cent tax on construction funds, bank balances, or business expenses,” he said, also rejecting claims that implementation has been postponed until 2027.
On construction contracts, the Withholding Tax rate has been reduced to two per cent. According to Oyedele, the cut will enable developers to retain more liquidity during project execution and reduce reliance on high-cost borrowing.
The law also provides mortgage interest tax deductions for individuals constructing owner-occupied residential houses, a measure intended to encourage home ownership.
Property owners earning rental income can deduct expenses such as repairs, insurance and agency fees before calculating tax liabilities. Oyedele said this adjustment could lower landlords’ tax burdens and incentivise better property maintenance.
Tenants are eligible for rent relief of up to N500,000, capped at 20 per cent of annual rent, a provision aimed at boosting disposable income, particularly for low-income earners. Lease agreements valued below N10 million annually, or ten times the annual minimum wage, are exempt from stamp duty.
The Act further exempts individuals from Capital Gains Tax on the sale of a dwelling house or interest in one, in a bid to encourage residential property investment.
Real Estate Investment Trusts (REITs) will qualify for Companies Income Tax exemptions, provided they distribute at least 75 per cent of dividend or rental income within 12 months of their financial year-end. Oyedele said the incentive is expected to attract institutional capital into the housing sector.
Manufacturers of building materials, including iron, steel and domestic appliances, may receive tax exemptions of up to 10 years under the economic development incentive scheme, supporting local production and reducing import dependence.
He added that there is scope to reduce Companies Income Tax for large firms from 30 per cent to 25 per cent to enhance Nigeria’s investment competitiveness, while small companies will pay zero per cent Companies Income Tax and be exempt from charging VAT or facing Withholding Tax deductions.
Reiterating the broader objective of the reforms, Oyedele maintained that the Nigeria Tax Act 2025 is structured to lower housing and rental costs, promote real estate growth, strengthen local manufacturing and deliver meaningful relief to households.
“Fact not fear, evidence beats emotion. If anyone makes an alarming claim or tries to misinform you, ask them, ‘Where is it in the law?’” he said, expressing confidence that housing and rental costs should decline under the new regime.
