The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has clarified that Nigeria’s new Capital Gains Tax (CGT) framework will not retroactively tax investment gains made before 2026.
This is according to a statement released by the committee detailing key provisions of the CGT reform set to take effect from January 1, 2026, under the proposed Nigeria Tax Act 2025.
At the heart of the clarification is a cost basis reset and a grandfathering clause designed to preserve old gains while applying tax only to new profits made after the reform takes effect.
His statement comes at a critical time for the capital market, which has recorded steep declines in recent days.
The Nigerian Exchange lost a staggering N6.3 trillion in market value over just seven trading sessions, including a N4.7 trillion plunge in a single day.
According to market analysts and investors who spoke with Naijaonpoint, uncertainty over the CGT reform has been a major trigger for the widespread sell-offs, as many feared they would be taxed on unrealised or historical gains.
According to the committee’s statement, the CGT reform introduces a significant change in how the tax will be calculated for investments made before 2026.
Specifically, the cost base or reference price for calculating capital gains will be reset to the higher of two amounts: the actual amount paid to acquire the asset or the asset’s market value as of December 31, 2025.
This means investors who bought shares at a lower price in previous years and saw their value rise will not be taxed on those historical gains. Instead, taxation will only apply to any appreciation in value that occurs after 2025.
For example, if an investor acquired shares at N5 and the value appreciates to N20 by December 31, 2025, the tax authority will treat N20 as the cost base going forward.
If the shares are later sold in 2026 for N25, only the N5 gain realised after the reset date will be subject to CGT. The N15 gain earned before the new law takes effect will not be taxed.
This mechanism is intended to protect long-term investors from being penalised for holding assets over time and reward patient capital without imposing a tax burden on past growth.
In addition to resetting the cost base, the CGT reform includes a grandfathering provision for past gains. Simply put, grandfathering means that any gains made up to December 31, 2025, will be exempt from the new capital gains tax regime.
Consider an investor who bought shares at N10 in 2020, which then appreciated to N50 by the end of 2025. If the investor sells those shares in 2026 for N60, the N40 gain accrued before 2026 is grandfathered and not subject to tax.
Only the gains made from that point forward will be subject to tax, making the system both equitable and aligned with global standards.
Investor confidence in the capital markets is highly sensitive to tax policy changes, and fears of retrospective taxation could have triggered market volatility.
Investor confidence in the capital markets is highly sensitive to tax policy changes, and fears of retrospective taxation could have triggered market volatility.
This timely intervention from Oyedele and his committee appears to be aimed at calming nerves and reassuring the market that the reforms are designed to be fair, transparent, and non-retroactive.
In addition to the cost reset and grandfathering, the broader CGT reform introduces several investor-friendly changes intended to modernise Nigeria’s tax system:
The full implementation guidelines for the reform are expected before the January 1, 2026, rollout.