A past president of the Africa Union of Architects, Tokunbo Omisore, says with the increase in Value Added Tax, the government should consider exempting locally-produced building materials.
Omisore, who is also the Chief Executive Officer, Top Services Limited, said the exemption would serve as an incentive and a boost to local manufacturing.
He said, “With the various challenges in the real estate industry if the government must insist on VAT, they should give exemption to the built industry, especially locally-produced housing materials.
“If this is considered, it will provide the support the national housing policy operators need to reduce the nation’s housing deficit that is present in excess of 17 million and still rising as our population remains unchecked.”
Omisore said the recent VAT increase from five percent to 7.5 percent would worsen the real estate sector as it would impact on construction works, rent and purchase without consideration for the poor economic performance of the sector in need of sustainable intervention.
“An exemption for the industry by the government may be a wise step to improve the real estate industry,” he said.
He explained that despite the exemption of real estate investment companies from paying tax on rental income, the newly introduced 7.5 percent VAT would affect the real estate industry through professional services and building materials used in the construction of buildings.
He said the increase might further raise the cost of real-estate delivery, the professional services, and building materials, adding that housing supply may, in turn, become unattractive and reduced.
SOURCE : PUNCH NEWSPAPER