₦500,000 Rent Relief Cap Sparks Concerns Over Tax Reform
By FIDELUS ZWANSON
THE Chairman of the Alliance for Economic Research and Ethics (AERE), Dele Kelvin Oye, has warned that certain provisions of the Nigeria Tax Act 2025 could undermine the objectives of the reform if not reviewed to reflect economic realities.
Oye identified the cap on rent relief—limited to ₦500,000 annually—and restrictions on foreign exchange deductions as key hurdles that may weaken the Act’s effectiveness. He noted that while the legislation represents Nigeria’s most comprehensive income tax reform since the return to democracy, it contains structural gaps that appear disconnected from prevailing market conditions.
Speaking in a policy paper titled “The Nigeria Tax Act 2025: A Critical Examination of Consolidation, Implementation Challenges, and Institutional Identity Crisis,” Oye argued that the rent relief threshold is grossly inadequate in major urban centres such as Lagos, Abuja and Port Harcourt, where housing costs have surged due to inflation and currency depreciation.
According to him, the fixed cap offers minimal relief to taxpayers and may discourage compliance, as the administrative effort required to claim the deduction could outweigh the actual tax benefit.
On foreign exchange rules, Oye criticised provisions that prevent businesses from deducting actual forex losses, warning that they impose heavy administrative burdens on firms operating in Nigeria’s volatile currency environment and could discourage investment.
