As Nigeria moves into full enforcement of the Nigeria Tax Act 2025, real estate and construction sector voices are beginning to weigh in on what the reform will actually mean for an industry long defined by informal transactions, fragmented compliance, and chronic housing shortages. Among them is Oluwabusuyi Adonis Fakanlu, the architect, project management specialist, and author of Sustainable Real Estate Development in Africa, who argues the reforms represent far more than a fiscal adjustment — they signal an attempt to formalise, and ultimately strengthen, one of Nigeria’s most consequential industries.

“The central question for this industry is no longer whether taxation will affect us — it’s how we adapt strategically while staying profitable and sustainable,” Fakanlu says. “That shift in framing matters. Too many stakeholders are still stuck asking the wrong question.”

On the VAT Exemption

Fakanlu points to the removal of Value Added Tax on land, buildings, and rent as the most consequential single change in the new law. Citing guidance from the Presidential Fiscal Policy and Tax Reforms Committee, he notes that buyers of land and completed buildings are now exempt from VAT obligations, as is residential and commercial rent.

“This is expected to reduce the cost burden on homebuyers and tenants while improving investment attractiveness in the property market,” he explains. “For developers, particularly in the middle-income and affordable housing segments where pricing sensitivity is highest, this could become a genuine catalyst for accelerated residential development.”

Given Nigeria’s severe housing deficit, Fakanlu believes the exemption’s real test will be whether it translates into more completed units on the ground, rather than remaining a favourable policy on paper.

Input VAT Recovery and Cash Flow

He is equally focused on a quieter but, in his view, structurally important provision: the ability for contractors and developers to recover input VAT on certain construction materials and services through tax credits.

“This has the potential to improve project cash flow management and reduce the hidden operational costs that have historically inflated the final cost of housing delivery,” Fakanlu says. “In an industry where cash flow, not just profitability, determines whether a project gets finished, that matters enormously.”

A Harder Conversation: Compliance and Formalisation

Fakanlu is direct about the other side of the reform — stricter enforcement, electronic invoicing, and broader compliance obligations that will test an industry historically comfortable with informal record-keeping.

“Developers and contractors who previously operated with limited tax documentation are going to face real scrutiny now,” he says. “Smaller construction firms and informal operators will feel the greatest pressure as government widens the tax net. I expect this to trigger a gradual restructuring of the industry, where compliance, transparency, and corporate governance stop being optional and start being competitive advantages.”

Rather than viewing this purely as a burden, Fakanlu frames formalisation as a precondition for the kind of institutional financing sustainable development actually requires. “Investors and financial institutions increasingly prefer projects with transparent tax records and verifiable financial structures,” he notes. “In that sense, this enforcement drive could indirectly strengthen sustainable development by forcing accountability across the sector.”

Sustainability as Economic Survival, Not Just Environmental Policy

Consistent with the themes of his book, Fakanlu argues the reforms could accelerate a shift toward smarter construction practices — as developers look to offset compliance costs while protecting margins.

“We’re likely to see increased adoption of cost-efficient building technologies, energy-efficient designs, modular construction systems, and locally sourced materials,” he says. “Sustainable development is no longer solely an environmental objective. It’s becoming an economic survival strategy.”

Reforms Are Not a Silver Bullet

Despite his broadly optimistic read on the policy’s design, Fakanlu is careful not to overstate what tax reform alone can achieve. He points to Nigeria’s continuing battle with inflation, currency volatility, high interest rates, and rising material costs — pressures that persist even with the new VAT exemptions in place.

“Even with these exemptions, developers still face elevated expenses tied to imported materials, logistics, energy supply, and infrastructure deficits,” he says. “Taxation alone cannot solve housing affordability without complementary policies around mortgage financing, infrastructure development, and local manufacturing capacity.”

He also flags a trust gap that could undermine the reform’s stated goals. “Government maintains that these reforms are designed to lower housing costs and stimulate investment. But there is real skepticism out there — about enforcement practices, and about whether the broader economic impact will match the promise. Success here depends heavily on transparency, fairness, and the visible use of tax revenues to improve infrastructure and public services. Government has to be seen to deliver its end of this.”

His Advice to the Industry

Fakanlu’s closing message to developers and contractors is one of adaptation rather than resistance. “The path forward requires adaptation, not resistance,” he says. “Companies that invest in compliance systems, financial transparency, sustainability practices, and operational efficiency are the ones who will emerge stronger in this environment. Developers who align their projects with environmental sustainability, energy efficiency, and formal financial structures will also find it easier to access institutional funding and international investment partnerships.”

Ultimately, Fakanlu sees the tax reform as part of a broader national project. “This is more than a fiscal adjustment — it’s an attempt to modernise the economy and formalise key sectors,” he says. “If it’s implemented well, alongside the right supportive policies, this could foster a more transparent, sustainable, and investment-friendly property market — one capable of driving long-term national development. That’s the opportunity in front of us. Whether we take it depends on execution, not just intent.”

Oluwabusuyi Adonis Fakanlu is an Architectural Technologist and author of “Sustainable Real Estate Development in Africa.

Ifeoma Okeke-Korieocha is the Aviation Correspondent at BusinessDay Media Limited, publishers of BusinessDay Newspapers. She is also the Deputy Editor, BusinessDay Weekender Magazine, the Saturday Weekend edition of BusinessDay. She holds a BSC in Mass Communication from the prestigious University of Nigeria, Nsukka and a Masters degree in Marketing at the University of Lagos. As the lead writer on the aviation desk, Ifeoma is responsible and in charge of the three weekly aviation and travel pages in BusinessDay and BDSunday. She also overseas and edits all pages of BusinessDay Saturday Weekender. She has written various investigative, features and news stories in aviation and business related issues and has been severally nominated for award in the category of Aviation Writer of the Year by the Nigeria Media Nite-Out awards; one of the Nigeria’s most prestigious media awards ceremonies. Ifeoma is a one-time winner of the prestigious Nigeria Media Merit Award under the 'Aviation Writer of the Year' Category. She is the 2025 Eloy Award winner under the Print Media Journalist category. She has undergone several journalism trainings by various prestigious organisations. Ifeoma is also a fellow of the Female Reporters Leadership Fellowship of the Wole Soyinka Centre for Investigative Journalism.

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