Oyedele: VAT Exemptions Announced for Land, Buildings, Rent

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has moved to clarify key provisions of the Nigeria Tax Act 2025, declaring that the new law eliminates Value Added Tax (VAT) on land, buildings and rent.

Speaking amid what he described as widespread misinformation, Oyedele said the legislation already in force was deliberately structured to make housing more affordable, stimulate property development and ease financial pressure on households and small businesses.

Under the revised tax regime, transactions involving land and completed buildings are fully exempt from VAT. The exemption also covers both residential and commercial rent.

According to Oyedele, this change is expected to lower the overall cost of acquiring property and reduce accommodation expenses nationwide.

He explained that while VAT may still apply to certain construction materials and services, developers now have the ability to recover VAT paid on assets and overheads through input VAT credits.

This, he noted, will help reduce project costs and improve cash flow management for contractors.

Oyedele firmly rejected viral claims suggesting the Act introduces a 25 per cent levy on construction funds, bank balances or general business expenses.

READ ALSO: New Tax Reform Reflects Concerns I Raised 10-Years Ago- Governor Otti

Writing on his WhatsApp platform on Sunday, Oyedele said, “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 stressed that the law does not tax money held in bank accounts, does not place levies on transfers used to purchase building materials and does not introduce any new 25 per cent construction or business cost tax. He also refuted claims that implementation has been deferred until 2027.

“Claims suggesting a new tax on building materials or bank funds are false and misrepresent the law,” Oyedele said.

On construction contracts, the Withholding Tax rate has been cut to two per cent. Oyedele said the reduction will allow developers to retain more liquidity during project execution, reducing reliance on high-cost borrowing.

Homebuyers constructing owner-occupied houses also benefit.

“Mortgage interest is tax-deductible for individuals developing an owner-occupied residential house,” he said, adding that this provision is intended to encourage home ownership.

Property owners earning rental income can now deduct related expenses—including repairs, insurance and agency fees—before calculating tax obligations. Oyedele said this adjustment may reduce landlords’ tax burden and incentivise better property maintenance.

Tenants are also covered. Individuals may claim rent relief of up to N500,000, capped at 20 per cent of annual rent. Oyedele said the measure is designed to boost disposable income, particularly for low-income earners struggling with rising housing costs.

Additionally, lease agreements valued below N10 million annually, or ten times the annual minimum wage, are exempt from stamp duty reducing formal tenancy costs for households and small enterprises.

The Act exempts individuals from paying Capital Gains Tax on the sale of a dwelling house or interest in one, a move aimed at encouraging residential property investment.

Real Estate Investment Trusts (REITs) will also qualify for Companies Income Tax exemption, 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 market.

Manufacturers of building materials such as 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 reliance on imports.

He further indicated there is room to reduce the Companies Income Tax rate for large firms from 30 per cent to 25 per cent, a measure he said would strengthen Nigeria’s investment competitiveness.

The new framework also caps the taxable value of employer-provided accommodation at the annual rental value and limits it to 20 per cent of an employee’s annual gross income, excluding rental value. According to Oyedele, this ensures housing benefits do not lead to excessive taxation.

Small companies will pay zero per cent Companies Income Tax. They will also be exempt from charging VAT and from Withholding Tax deductions on invoices and payments—steps aimed at supporting smaller contractors and suppliers.

Reiterating the broader intent of the legislation, Oyedele maintained that the Nigeria Tax Act 2025 is designed to make housing more affordable, promote real estate expansion, strengthen local manufacturing and deliver meaningful rent relief.

Ending his message with a call for public scrutiny of the law’s actual provisions, Oyedele said, “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 added that with the reforms now in place, housing and rental costs should decline rather than rise.