Federal Government Debunks Viral Claims of 25% Tax on Building Materials and Bank Savings
The federal government has categorically denied widespread claims that the Nigeria Tax Act 2025 imposes a 25% tax on building materials, construction funds, or money held in bank accounts. In a statement issued on Sunday, February 15, the Presidential Committee on Fiscal Policy and Tax Reforms addressed misinformation circulating in a viral video, labeling the assertions as false and misleading.
Official Clarification on Tax Act Provisions
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, emphasized that the Act has already commenced and contains no provision for a 25% tax on construction costs, business expenses, or bank balances. The committee specifically refuted claims that the law would take effect in 2027 and introduce new levies on funds used for construction and other transactions.
According to the official statement, the Nigeria Tax Act 2025 is designed with measures aimed at reducing housing costs, encouraging real estate development, and supporting small businesses and renters. The committee urged Nigerians to verify information against the actual provisions of the law to avoid being misled by unverified claims on social media platforms.
Key Provisions and Exemptions in the New Tax Law
The committee outlined several key provisions that demonstrate the law's focus on relief and support rather than additional taxation:
- Exemption of land and buildings from Value Added Tax (VAT)
- Reduced Withholding Tax of 2% on construction contracts
- Ability for contractors to recover input VAT on eligible expenses
- Rent relief of up to N500,000 for eligible individuals
- Exemption of rent from VAT
- Stamp duty relief on certain lease agreements below specified thresholds
- Exemption from Capital Gains Tax for individuals disposing of a dwelling house
- Tax incentives for Real Estate Investment Trusts (REITs) when distributing substantial portions of their income
What the Act Does Not Provide
The committee stressed several important points about what the Nigeria Tax Act 2025 does not include:
- 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
The government maintained that these reforms are specifically designed to make housing more affordable and ease financial pressure on developers, contractors, and tenants across Nigeria. The committee emphasized that the law does not tax transfers for buying building materials and does not introduce any new 25% construction levy.
Background on Digital Banking and Tax Compliance
Earlier reports had indicated that Nigerians might need to pay closer attention to bank transfer narrations as the federal government prepares to implement aspects of the new tax regime. The government has suggested that reforms will leverage digital banking data to enhance tax compliance, making accurate transaction descriptions increasingly important.
Financial experts have warned that vague or misleading bank transfer narrations could trigger additional scrutiny from tax authorities, potentially leading to audits or penalties. However, the committee's latest clarification emphasizes that these measures are separate from the false claims about 25% taxes on building materials and bank savings.
The federal government's statement represents a significant effort to correct misinformation and ensure public understanding of the actual provisions within the Nigeria Tax Act 2025, which focuses on creating relief mechanisms rather than imposing new burdens on citizens and businesses.
