Tax Reform: Developers Make One Demand of FG on Social Housing, Building Materials
- A group of housing developers in Nigeria have asked the FG to include tax reliefs for them in the Tax Bill
- The need for affordable housing is high, and it will take incentives to push more investors into social housing
- The developer explained how the tax credits to the sector can translate to lower rents
Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
A group of housing developers, under the umbrella of the Housing Development Advocacy Network (HDAN), have called on the federal government to include tax relief for building materials and developers of social housing in the Nigeria Tax Bill 2024.
Executive Director of the group, Festus Adebayo, noted that incorporating tax reliefs for social housing is key to ensuring that Nigerians get affordable housing.
He explained that the inclusion of low-income housing tax credits in the bill will provide the right incentives for developers to construct or rehabilitate affordable houses for low-income earners in Nigeria.
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In his statement, Adebayo observed that the government should issue the tax credits through tested and competitive processes that will award tax credits to developers who are truly invested in addressing Nigeria’s housing challenges.
A World Bank report earlier shared that about 51.4% of an estimated 224 million Nigerians are multi-dimensionally poor, while 58.8% live in urban slums.
This highlights an urgent need for basic infrastructure, particularly affordable housing, hence the need to provide tax reliefs for developers, The Nation reports.
Tax reliefs for building materials
The HDAN leader noted that the high cost of building materials, land acquisition and foreign exchange volatility pose serious challenges to developers and translate into higher rents.
He described the ongoing tax reforms as an opportunity to address some of the challenges and create a more conducive fiscal environment for developers to provide affordable housing for Nigerians.
Adebayo also noted that a lot of economic pressures, like high interest rates, make it impossible for the average Nigerian to afford mortgages.
Tax Reform Bill introduces higher taxes
The Nigeria Tax Bill 2024 has been undergoing deliberations in the last few months and is set to be passed into law by the National Assembly.
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This bill increases the Value Added Tax (VAT) from 7.5% to 10% immediately, and 15% by 2030. It also introduces several taxes, including a 27.5% Company tax, 4% Development levy, and 5% Excise tax on telecom services and others.
The HDAN leader, in his statement, noted that such policies could discourage further investment in house development if there are no provisions to provide buffers for social housing initiatives.
Mr. Adebayo also urged the lawmakers to speed the passing of the 11 mortgage and housing-related bills and review outdated laws like the Land Use Act and Mortgage Bank Act.
Tax Bill introduces tax on lottery
In related news, the Tax Bill 2024 has several new tax provisions. Section 62 and Schedule 10 of the bill propose a five per cent excise duty on revenue from lottery and gaming trade or business.
There is also a five percent excise duty on telecom services, including post-paid and prepaid services controlled by the Nigerian Communications Commission (NCC).
The bill also includes other critical reforms that will greatly impact the business environment in Nigeria.
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Source: Legit.ng
