In a significant policy shift, the Federal Government has ordered all Ministries, Departments, and Agencies (MDAs) to cease the 1% stamp duty deductions from contractor payments, a move aligned with the recent Nigeria Tax Act 2025. This decision aims to ease the financial burden on contractors and stimulate the economy by increasing liquidity in the construction sector.
The stamp duty, previously implemented to enhance government revenue, faced criticism for hampering project execution and deterring investments. Stakeholders in the construction industry have welcomed the decision. "This is a positive step towards fostering a more conducive environment for contractors,” stated Adeola Olatunji, President of the Contractors Association of Nigeria. “It allows us to reinvest more effectively in our projects."
As the government seeks to bolster infrastructure development amidst economic recovery efforts, this policy could incentivize private sector participation in public projects. Moving forward, the impact of this decision will be closely monitored, as it reflects the government's commitment to reforming fiscal policies in a way that promotes growth while addressing the concerns of stakeholders in the development sector.