New Capital Gains Tax Framework to Boost Investor Confidence, Says Oyedele
By Patience Ikpeme
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has stated that the new Capital Gains Tax (CGT) framework represents a significant improvement over the existing law, designed to make investment in the Nigerian capital market more attractive, reduce risk, and ensure fairness.
In a detailed explanation of the reforms, Oyedele confirmed that the tax system’s goal is to promote equity and confidence in the market, not the reverse.
“The new CGT framework represents a major improvement over the existing law. The reform makes investment in the Nigerian capital market more attractive, reduces investment risk, and ensures fair treatment of legitimate costs incurred by investors. In essence, the reform promotes equity and confidence in the market – not the reverse,” Oyedele stated.
The reform objectives include reducing investment risk by allowing deductions for capital losses and other investment-related costs, protecting small and institutional investors through exemptions, and harmonizing tax administration for progressivity and ease of compliance.
A major change is the replacement of the flat 10% CGT rate with progressive income tax rates ranging from 0% to 30%, depending on the investor’s overall income or profit level. Oyedele noted that the top rate of 30%, which applies to large corporate investors, is expected to be reduced to 25% under the broader corporate tax reform. Crucially, investors may now deduct certain costs that were previously disallowed under the old CGT regime, ensuring they are not taxed on a net loss position.
The framework provides several major exemptions to protect small and institutional participants. Disposals within 12 months where total sales proceeds do not exceed N150 million and total gains do not exceed N}10 million qualify for full exemption. Additionally, the reinvestment of proceeds into shares of Nigerian companies within 12 months qualifies for full exemption, even where the sales proceeds threshold is exceeded. Other exempted transactions include capital gains from foreign share disposals that are repatriated into Nigeria through CBN-authorised channels, and gains made by institutional investors that enjoy corporate income tax exemption, such as Pension Funds (PFAs) and Real Estate Investment Trusts (REITs). Small companies with a turnover not exceeding N100 million and total fixed assets not more than N250 million will pay 0% CGT.
To ensure fairness, Oyedele explained the method for determining gains on existing investments before the law takes effect on January 1, 2026. The cost base for these investments will be reset to the higher of the actual acquisition cost or the closing market price as of December 31, 2025. This prevents the application of the new rule to gains accrued before the new law.
Investors can now deduct a wider range of legitimate costs, including realized capital losses on share disposals, transaction charges such as brokerage fees and regulatory levies, and expenses such as margin interest and realized foreign exchange losses proved to be incidental to the investment. However, exchange gains would be treated as taxable.
For compliance, resident investors are required to register for tax and obtain a Tax ID, while non-resident investors who earn only passive income are not required to do so. Self-assessment is the default compliance model. Filing deadlines for individuals are on or before March 31 of the following year, while companies must file within six months after their financial year-end. All applicable taxes are to be paid in Naira.
Oyedele confirmed that the reform is not revenue-driven but designed to achieve harmonisation, promote fairness, competitiveness, long-term interest, and investor confidence in Nigeria’s capital markets.
He concluded: “The new CGT framework makes the tax system fairer, more aligned with global practice, and friendlier to long-term investors. It reduces investment risks, protects small investors, encourages reinvestment, and simplifies compliance while ensuring that large and high-income investors who wish to exit the market contribute their fair share on realized gains that are not re-invested.”
