Nigeria’s capital market is in turmoil following fresh concerns over the impending 25% Capital Gains Tax (CGT) on share disposals set to take effect in January 2026.
The anxiety stems from new clarifications made by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, during an engagement organized by the Nigerian Exchange Group (NGX) last month.
Oyedele explained that under the new rule, investors who sell shares and reinvest the proceeds in fixed-income securities or other non-equity assets will be subject to a 25% CGT.
He, however, noted that retail investors will largely be unaffected, as the N150 million annual exemption threshold effectively shields 99.9% of individual players.
“Only very few big investors cross that threshold, mostly institutional players or high-net-worth individuals,” Oyedele said.
Despite the exemption, capital market operators warn that the new tax could disrupt investor sentiment, especially among foreign portfolio investors who have recently shown renewed interest in Nigerian equities.
One market operator, who spoke on condition of anonymity, described the policy as “poorly conceived,” warning that its ambiguities, retroactive computation, and steep rate could deter capital inflows and raise the cost of equity at a critical time when Nigeria is just beginning to recover investor confidence.
The expert added that with clearer rules, moderate rates, and cost-basis adjustments, the tax could still be implemented in a way that supports rather than undermines market growth.
Under the current design, capital gains are calculated based on historic cost, not adjusted for inflation or currency depreciation.
“That means investors could be taxed on gains made years before the law even existed,” one analyst explained.
This approach, they warn, could lead to double taxation and inflated liabilities, especially in an inflationary environment where the naira’s depreciation distorts real gains.
Echoing similar sentiments, Otunba Adetunji Oyebanji, CEO of 11 Plc, described the new regime, which also raises corporate CGT to 30% as potentially punitive for businesses.
He noted that the combination of higher rates and stricter reporting rules could impose heavy burdens on smaller enterprises while discouraging large-scale investments.
In 2023, while the proposal was still being debated, Sam Onukwue, Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), told Naijaonpoint that the reintroduction of CGT risked stifling the market.
Ironically, Taiwo Oyedele, now one of the tax’s chief defenders, once shared similar reservations.
In a 2022 presentation at an RCCG event, he warned that the 10% CGT introduced under the Finance Act could discourage capital market investment, especially given the concurrent expiration of tax exemptions on corporate bonds.
In a 2022 presentation at an RCCG event, he warned that the 10% CGT introduced under the Finance Act could discourage capital market investment, especially given the concurrent expiration of tax exemptions on corporate bonds.
The timing of the controversy is delicate, with the All-Share Index up 38% year-to-date as of September 2025. This extends a five-year streak of annual gains, the longest since the 2000–2008 boom cycle.
Analysts fear that sudden policy shifts such as the CGT rule could reverse these gains, triggering capital flight and eroding confidence just as Nigeria seeks to attract long-term foreign investment.
While the Federal Government aims to broaden its tax base and curb speculative capital movement, market stakeholders warn that poor design and abrupt implementation could deliver the opposite effect.
They opine that it can reduce liquidity, discouraging participation, and undermining Nigeria’s reputation as a reform-driven investment destination.
As one analyst summed it up: