Tax Increment Killing Real Estate Sector Real Estate Investor, Omoha Nduka
Among the challenges besetting the real estate sector in Nigeria, real estate investor/entrepreneur and the Chairman and Chief Executive Officer of Prince Luxury Group, Omoha Nduka John popularly known as “Prince Omoha” has identified incessant tax increment by the government as the most frustrating.
In a recent interview he disclosed that tax increment is one of the policies of the government he would want to see abolished as it is a stiffening operation in the sector.
According to him, ” Let me share with you : Recently, a client of ours in the real estate sector was in the process of acquiring a piece of property in the Lekki axis of Lagos. The purchase price had already been agreed, necessary due diligence investigations conducted at the land registry, and title over the property was certified to be unencumbered. The prospective seller of the property issued his invoice to our client for the sale of the land and included Value Added Tax (VAT) of 7% to the purchase price. Our Client was startled by the inclusion of VAT and requested to know the position of the law on VAT on property transactions.
“Though Nigeria’s VAT rate of 7% pales in comparison to other countries including the United Kingdom which charges 20%, it makes a difference on large transactions such as property and real estate. The Taxman’s interest in these burgeoning property transactions is not surprising as he seeks to generate revenue for the government. But the question that needs to be asked and answered is: is VAT applicable to property and real estate transactions, or are buyers being made to bear an unnecessary unlawful cost? I think the tax increments should be abolished in the real estate sector to enable interested buyers to be able to afford their dream homes.
He also identified other challenges in the sector to include : Environmental change; shifting political climates; volatile markets; rising mortgage rates and evolving technology trends.
“These are just some of the challenges every developer is facing everywhere. Ask your typical agent for a list of their biggest challenges, and you’ll invariably hear many of the same answers repeated,” he added.