Real estate experts and financial analysts have expressed optimism about the new Nigerian Tax Reforms, saying it would impact their sector positively.
They pointed out that the current administration’s move to consolidate tax provisions and address multiple taxation issues would benefit the real estate sector.
The experts included B. Adedipe Associates Limited, Dr. AbiodunAdedipe; Executive Director of the Housing Development Advocacy Network (HDAN), Festus Adebayo;, and Founder and CEO of Eximia Realty Company Ltd, Hakeem Ogunniran.
Adedipe, who is Founder and Chief Consultant of B. Adedipe Associates Limited, pointed out that, for decades, multiplicity of taxes had stifled real estate, particularly for small and mid-sized developers.
Presenting a comprehensive analysis of the new reforms and how they may impact housing development and investment, Adedipe said the new reforms aimed to harmonise taxes at every governmental level, potentially reducing administrative burdens that have long posed challenges for real estate players.
According to him, developers will hefty upfront taxes would find some relief, allowing more resources to flow into actual property development
He expressed this opinion at a Zoom conference hosted by the Executive Director of the Housing Development Advocacy Network (HDAN), Festus Adebayo, at the weekend.
The conference was titled “Nigeria’s New Tax Reforms: What Effect on the Real Estate Sector?”
He said that President Tinubu’s administration introduced the reforms as part of four legislative bills: The Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
He explained that the goal of this package is to streamline Nigeria’s tax landscape to make compliance easier for businesses.
“The reform has great potential, especially if executed efficiently.
“Developers facing hefty upfront taxes will now find some relief, allowing more resources to flow into actual property development,” Adedipe said.
He stressed that these changes could redirect funds towards growth in the sector rather than being absorbed by layered tax obligations.
One aspect of the reform includes exempting essential goods and services from VAT, which could lower costs on construction materials and transportation, directly benefiting the housing sector.
“Any reduction in the cost of materials, particularly in a high-inflation environment, could alleviate some financial pressures on developers and make housing projects more viable,” Adedipe explained.
He revealed that Nigeria’s long-standing issue with redundant taxes has limited growth in real estate, especially for smaller developers.
However, some provisions have generated controversy among stakeholders.
Northern governors and the Nigeria Economic Council have expressed concerns over the proposed VAT increase, intended to compensate for revenue reductions resulting from tax streamlining.
The reforms also implement a progressive tax rate structure, placing greater fiscal responsibility on wealthier citizens and larger corporations, a move aligned with global practices.
Adedipe pointed out that this shift could drive more local investment in real estate by lowering the tax burden on smaller developers.
“The progressive tax rates now make individuals at the bottom. This differentiation aligns with placing a heavier burden on higher-income individuals while sparing those at the bottom.
“This differentiation aligns with global tax systems and could encourage more local investment in housing,” he said.
On his part, Adebayo emphasised that the lack of targeted provisions for affordable housing has sparked concerns within the real estate sector.
Housing advocates, before now, have called for tax reliefs on materials used in affordable housing construction.
“For years, affordable housing advocates have sought tax breaks and exemptions for materials used in low-cost housing,” he said.
Adedipe acknowledged this gap and encouraged continued advocacy.
“We should not overlook the economic role of real estate. As stakeholders, we must continue the conversation, urging policymakers to consider the unique needs of the sector,” he said.
Conference participants including, Hakeem Ogunniran, the Founder and CEO of Eximia Realty Company Ltd. raised questions about the reforms’ likely impact on property prices, rent levels, and the tax treatment of real estate investment trusts (REITs).
Ogunniran added that under the new tax reform, “Any distribution made under a REIT or REICO is exempted from deductions at source pursuant to Section 80 of CITA.” That’s a major breakthrough provision – completing the cycle of those asset classes as “transparent, flow-through entities. That should enhance the growth of REITs and facilitate capital raising by real estate developers,” he said.
Adedipe underscored the importance of ongoing advocacy during this critical legislative period, saying, “We have space to intervene and raise all these issues before these bills are signed into law.” In response, Adebayo said HDAN is ready to work closely with the National Assembly to secure provisions that would specifically benefit affordable housing and real estate investment.
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