The Nigerian authorities not too long ago unveiled a brand new capital positive factors tax (CGT) geared toward making the system extra progressive.
The brand new regime, which can begin on January 1 2026, is rumoured to have raised the CGT from 10 % to 30 % except the proceeds are reinvested in different listed or unlisted home equities.
A number of stakeholders, together with these within the capital market, have consequently expressed concern that the rumoured enhance will put the nation’s shares in danger and disincentivise international funding.
Nonetheless, Taiwo Oyedele, chairman, Nigeria’s Presidential Committee on Fiscal Coverage and Tax Reforms, not too long ago took to his official X deal with to offer readability on this and several other different continuously requested questions on Nigeria’s new tax legal guidelines.
He revealed that the CGT price has not been elevated to 30 %, noting that it has quite been built-in into private and company revenue tax.
“This implies the tax you pay on capital positive factors depends upon your general revenue stage or firm earnings, making the system extra progressive. Successfully, the relevant CGT price beneath the brand new legal guidelines ranges from 0percent to 30percent,” Oyedele mentioned.
The CGT is a tax charged on the revenue constructed from the sale of a rechargeable asset akin to shares, actual property, or different investments.
At present, CGT in Nigeria is charged at a flat price of 10 % on all chargeable belongings, whatever the taxpayer’s revenue stage,” he mentioned.
“The reform makes CGT progressive in order that low-income earners both pay no CGT or pay much less, whereas higher-income earners contribute a fairer share. It additionally helps to cut back distortions the place revenue may beforehand be misclassified as capital to take pleasure in a decrease, flat CGT price,” he additional mentioned.
𝐇𝐨𝐰 𝐝𝐨𝐞𝐬 𝐧𝐞𝐰 𝐥𝐚𝐰 𝐛𝐞𝐧𝐞𝐟𝐢𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬?
Oyedele defined that the CGT solely applies to internet positive factors, since capital losses will be offset in opposition to capital positive factors.
He mentioned that proceeds from gross sales not exceeding N150 million yearly, the place the positive factors aren’t greater than N10 million, are exempt. This implies about 99 % of particular person buyers are successfully exempt.
“The place the proceeds exceed the exemption threshold, CGT just isn’t due if such proceeds are reinvested into the shares of a Nigerian firm,” he mentioned.
“Institutional buyers akin to pension funds are exempt from CGT, simply as they’re from company revenue tax.”
He acknowledged that corporations present process reorganisations, mergers, or restructurings aren’t topic to CGT on these transactions.
𝐈𝐬 𝐭𝐡𝐢𝐬 𝐫𝐞𝐟𝐨𝐫𝐦 𝐦𝐞𝐚𝐧𝐭 𝐭𝐨 𝐢𝐧𝐜𝐫𝐞𝐚𝐬𝐞 𝐠𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐫𝐞𝐯𝐞𝐧𝐮𝐞?
Oyedele famous that the CGT income is traditionally very small as it’s lower than two % of what’s collected from Firms Earnings Tax (CIT) and Worth Added Tax (VAT).
“The reforms are about harmonisation, equity and effectivity. In actual fact, companies will profit much more from decreased CIT charges and broader VAT enter credit. As an illustration, the Federal Inland Income Service (FIRS) collected solely N52 billion from CGT in 2024 in comparison with over N15 trillion from CIT and VAT. The decreased CIT price and broader VAT credit score are estimated to learn companies within the area of N4.5 trillion,” he defined.
He revealed that almost all international buyers can declare tax credit of their residence nations for taxes paid in Nigeria beneath double taxation agreements or unilateral tax reduction. This implies CGT paid in Nigeria will typically not be a further price.
𝐖𝐢𝐥𝐥 𝐭𝐡𝐞𝐬𝐞 𝐜𝐡𝐚𝐧𝐠𝐞𝐬 𝐦𝐚𝐤𝐞 𝐍𝐢𝐠𝐞𝐫𝐢𝐚 𝐥𝐞𝐬𝐬 𝐚𝐭𝐭𝐫𝐚𝐜𝐭𝐢𝐯𝐞 𝐟𝐨𝐫 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭?
He mentioned these adjustments won’t make Nigeria much less engaging, noting that the brand new guidelines are per worldwide greatest practices.
“Many nations already apply progressive tax therapy to capital positive factors, and exemptions for small buyers and reinvestment make Nigeria’s regime aggressive. When thought-about holistically, the decrease CIT price and broader enter VAT credit score within the new tax legal guidelines will enhance profitability of corporations, fairness valuations, and improve general investor returns,” Oyedele mentioned.
𝐃𝐨𝐞𝐬 𝐂𝐆𝐓 𝐫𝐞𝐟𝐨𝐫𝐦 𝐚𝐩𝐩𝐥𝐲 𝐨𝐧𝐥𝐲 𝐭𝐨 𝐭𝐡𝐞 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐦𝐚𝐫𝐤𝐞𝐭?
The tax chief famous that the CGT reform applies to all chargeable belongings, except particularly exempt.
He cited examples of exemptions along with the brink for shares to incorporate people promoting as much as two private autos per 12 months, and the sale of an owner-occupied residential property.
𝐃𝐨 𝐫𝐞𝐟𝐨𝐫𝐦𝐬 𝐚𝐝𝐝𝐫𝐞𝐬𝐬 𝐢𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐞𝐱𝐜𝐡𝐚𝐧𝐠𝐞 𝐫𝐚𝐭𝐞 𝐫𝐢𝐬𝐤𝐬?
He mentioned the reforms don’t deal with inflation and trade price dangers, stressing that inflation and forex dangers have an effect on all investments and can’t be eradicated by means of tax legal guidelines. “Traders are anticipated to handle these dangers as a part of their broader funding methods.”
