Nigeria’s new Capital Gains Tax (CGT) framework will make investing in the capital market more attractive by reducing risks, promoting fairness, and simplifying compliance, according to the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele.
Mr Oyedele said the reform, which takes effect from January 1, 2026, represents one of the most significant improvements to Nigeria’s tax system in recent years.
He noted that contrary to misinformation circulating in some quarters, the new CGT rules are designed to protect small investors, encourage reinvestment, and align with international best practices, rather than impose additional burdens on the market.
The reform “reduces investment risks, protects small investors, encourages reinvestment, and ensures that high-income earners contribute their fair share without discouraging market participation,” he said in an explainer posted on X, formerly known as Twitter.
Under the new rules, the flat 10 per cent CGT rate has been replaced by progressive income tax rates ranging from zero to 30 per cent, depending on an investor’s overall income or profit level while large corporate investors will see the top rate reduced to 25 per cent as part of a wider corporate tax reform.
The tax titan also noted that the framework aallows investors to deduct legitimate costs such as brokerage fees, regulatory charges, realised capital losses, margin interest, and foreign exchange losses directly tied to investments, thereby ensuring that they are not taxed when operating at a loss.
Mr Oyedele said the reforms introduced a more inclusive approach to taxation by exempting several categories of investors and transactions.
Retail investors and tax-exempt institutions such as Pension Funds Administrators (PFAs), Real Estate Investment Trusts (REITs), and NGOs will not be subject to CGT. Similarly, small companies with annual turnover below N100 million and assets under N250 million will pay zero percent CGT.
Further, gains from investments in labelled startups made by venture capitalists, private equity firms, accelerators, or incubators will also be exempt.
For individuals and firms whose proceeds exceed the N150 million threshold within 12 months, the law provides relief through reinvestment. If the proceeds are reinvested into shares of Nigerian companies within a year, such transactions will enjoy full exemption from CGT.
Additionally, gains from the disposal of foreign shares repatriated through Central Bank of Nigeria (CBN) channels will not attract the tax.
In a move to ensure fairness, the cost base for calculating gains will be reset to the higher of the actual acquisition cost or the market value as of December 31, 2025. This prevents retrospective taxation on gains that accrued before the law’s commencement.
Resident investors are required to register for tax identification numbers and pay applicable taxes to their state of residence or the Nigeria Revenue Service (NRS), depending on whether they are individuals or corporate entities.
However, non-resident investors who earn only passive income such as dividends or capital gains will not need to obtain a Tax ID.
He also clarified that the government may also introduce withholding mechanisms through brokers or exchanges to simplify compliance and collection.
Business Post reports that tax filing deadlines remain straightforward: individuals must file by March 31 of the following year, while companies have six months after their financial year-end to do so. Non-resident investors will pay upon disposal of shares, unless they choose to reinvest within the same year.
Mr Oyedele emphasized that the reform is not a revenue-raising measure but a strategic policy move to improve fairness, competitiveness, and long-term investor confidence in Nigeria’s financial markets, adding that gains realised before the end of 2025 would be “grandfathered,” meaning they will only be taxed under the existing law when disposed of, preserving investor rights during the transition period.
He further clarified that corporate reorganisations such as mergers, acquisitions, or internal restructurings are exempt from CGT, and investors are expected to maintain proper records of acquisitions, disposals, and related costs for audit purposes.