The Nigerian Tax Act 2025: Gains, Pains, and the Path Ahead-ESV Babatunde Folarin Abiodun
KEHINDE AKINPELU ILORIN
The real estate sector in Nigeria is on the brink of a revolution with the introduction of the Nigerian Tax Act 2025. Posited by ESV Babatunde Folarin Abiodun MNIVS RSV, this landmark legislation promises to bring about significant changes that aim to boost government revenue and promote transparency in the industry. As stakeholders prepare to navigate the gains and pains of this new tax regime, it is essential to understand the implications and chart a path forward for the future of real estate in the country.
One of the key gains of the Nigerian Tax Act 2025 is the increased transparency it mandates in property transactions. By requiring strict reporting and documentation for property sales, the Act aims to curb informal transactions and enhance investor confidence in the market. This move towards a more formal and transparent real estate sector is expected to create new revenue streams for the government, including Capital Gains Tax, Withholding Tax, and Value Added Tax on real estate services.
In addition to promoting transparency, the Act also paves the way for digitalization in tax reporting and property data. This shift towards digital platforms is set to reduce corruption and simplify the process of verifying ownership and transaction history. Moreover, developers stand to benefit from tax incentives for affordable housing and urban renewal projects, encouraging them to take part in addressing the housing deficit in the country.
However, amidst these gains, there are potential pains that stakeholders must be prepared to address. The new tax regime could lead to higher transaction costs, which may, in turn, drive up property prices. Property owners, developers, and agents will also face a compliance burden with new reporting obligations and tax requirements. Additionally, the increase in Capital Gains Tax rates for companies from 10% to 30% and the impact of Withholding Tax on rental income could pose challenges for individuals and landlords in the rental market.
As the industry grapples with these challenges, effective implementation and stakeholder engagement will be critical to the success of the Nigerian Tax Act 2025. Collaboration between the government and industry players will be essential in navigating the complexities of this new tax regime and ensuring a smooth transition towards a more transparent and sustainable real estate sector in Nigeria.
The Nigerian Tax Act 2025 represents a significant step towards transforming the real estate sector in the country. While there may be challenges along the way, the gains of increased transparency and digitalization offer a promising outlook for the future of real estate in Nigeria. With proactive engagement and collaboration, stakeholders can work together to capitalize on the opportunities presented by this groundbreaking legislation and pave the way for a more vibrant and resilient real estate industry in the years to come.

