Tax Act 2025: FG Refutes Claims of 25% Levy on Building Materials
The Federal Government has formally denied reports and allegations suggesting the imposition of a 25% levy on building materials under the recently enacted Tax Act 2025. In a detailed rebuttal, government authorities clarified that the legislation does not contain provisions for such a hike, countering claims made by the former Minister of Transportation, Chibuike Rotimi Amaechi.
The clarification follows growing concerns within the real estate and construction sectors regarding the potential for escalated costs of essential materials such as cement, reinforcement bars, and finishing goods. The government’s response aims to stabilize market expectations and correct what it describes as a "misinterpretation" of the new fiscal framework.
Clarifying the Provisions of Tax Act 2025
According to official statements from the Ministry of Finance and the Federal Inland Revenue Service (FIRS), the Tax Act 2025 was designed to streamline the national tax system and broaden the tax base without placing an undue burden on critical infrastructure sectors. The government maintained that no specific clause in the Act mandates a 25% levy on either locally manufactured or imported building materials.
The authorities emphasized that the current Value Added Tax (VAT) and relevant import duties remain governed by existing schedules, which are periodically reviewed based on economic exigencies but have not reached the levels alleged. The government noted that such "misinformation" could lead to artificial price hikes by distributors and retailers looking to exploit perceived policy changes.
The Context of the Contention
The controversy gained momentum following public remarks by former Minister Rotimi Amaechi, who raised alarms over the fiscal implications of the new Act on the Nigerian housing deficit. Amaechi had suggested that the tax burden would make homeownership even more unattainable for the average Nigerian.
In response, government spokespersons argued that the former minister’s assertions lacked a factual basis in the actual text of the law. They stated that the Tax Act 2025 actually introduces various incentives for companies involved in large-scale infrastructure and social housing, aimed at reducing rather than increasing the overall cost of project delivery.
Impact on the Construction and Housing Sector
The construction industry is highly sensitive to fiscal policy shifts, as building materials account for approximately 60% to 70% of total construction costs in Nigeria. A 25% levy would have had a catastrophic effect on the government’s own "Renewed Hope" housing agenda and private sector developments alike.
Industry stakeholders, including the Federation of Construction Industry (FOCI) and the Nigerian Institute of Building (NIOB), have been urged to refer strictly to the gazetted version of the Tax Act 2025. The government reiterated its commitment to maintaining a conducive environment for investment in the built environment, acknowledging that affordable housing is a key driver of national economic stability.
Regulatory Oversight and Price Monitoring
To prevent market exploitation, the Federal Competition and Consumer Protection Commission (FCCPC) has been alerted to monitor the pricing of building materials across the country. The government warned that any arbitrary price increases predicated on the false 25% tax claim would be met with regulatory sanctions.
Furthermore, the FIRS has committed to holding sensitization workshops for stakeholders in the construction value chain to ensure a comprehensive understanding of the tax obligations and incentives available under the new legislative regime.
Forward-Looking Perspective
The Federal Government’s swift rebuttal serves to de-escalate tensions within a vital sector of the economy. As the Tax Act 2025 enters full implementation, the focus will remain on transparency and the accurate communication of fiscal policies to avoid market distortions.
For investors and developers, the clarification provides much-needed policy certainty. Moving forward, the effectiveness of the Act will be measured by its ability to generate revenue for the state while simultaneously fostering growth in the housing and infrastructure sectors, which remain essential for Nigeria’s long-term economic recovery.
