Oyedele Clarifies New Capital Gains Tax Rules
By Patience Ikpeme
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has provided detailed clarification on Nigeria’s new Capital Gains Tax (CGT) regime, describing it as fair, progressive, and beneficial to both investors and businesses.
Oyedele explained that CGT is a tax on the profit made from disposing of assets such as shares and real estate. “Only the gain, not the total proceeds, is taxed. The current rate is a flat 10 percent,” he said. “The reforms make CGT progressive so that low-income earners either pay no CGT or pay less, while higher-income earners contribute a fairer share.”
He clarified that the revised system has not raised the CGT rate to 30 percent. “Instead, CGT has been integrated into personal and corporate income tax,” he said. “This means the tax you pay on capital gains depends on your overall income level or company profits, making the system more progressive.” According to him, the effective rate under the new laws will range from 0 to 30 percent.
Providing details of the exemptions, Oyedele said, “Proceeds from sales not exceeding ₦150 million annually, where the gains are not more than ₦10 million, are exempt. This means about 99 percent of individual investors are effectively exempt from CGT.” He added that where proceeds exceed this threshold, CGT will not apply if the funds are reinvested into the shares of a Nigerian company.
“Institutional investors such as pension funds are also exempt, just as they are from corporate income tax,” he said. “Companies undergoing mergers, reorganisations, or restructurings will not be subject to CGT on those transactions. It’s important to note that CGT only applies to net gains since capital losses can be offset against capital gains.”
Oyedele pointed out that the reforms are not driven by revenue motives. “CGT revenue is historically very small—less than two percent of what is collected from Companies Income Tax (CIT) and Value Added Tax (VAT),” he said. “In 2024, the FIRS collected only ₦52 billion from CGT compared to over ₦15 trillion from CIT and VAT.”
He explained that the goal of the reform is to improve fairness and efficiency in Nigeria’s tax system. “Businesses will benefit far more from reduced CIT rates and broader VAT input credits,” he said. “The reduced CIT rate and expanded VAT credit are estimated to benefit businesses by about ₦4.5 trillion.”
On the international front, Oyedele stated that the new rules align with global best practices. “Many countries already apply progressive tax treatment to capital gains,” he said. “The exemptions for small investors and reinvestment make Nigeria’s regime competitive. Overall, the reforms will improve profitability, enhance equity valuations, and increase investor returns.”
Addressing concerns from foreign investors, he explained that many will not face additional costs. “Most foreign investors can claim tax credits in their home countries for taxes paid in Nigeria under double taxation agreements or unilateral relief provisions,” he said.
Oyedele also clarified that the reform applies to all chargeable assets unless specifically exempted. “In addition to the share threshold, individuals selling up to two personal vehicles per year and those selling an owner-occupied residential property are exempt,” he said.
Responding to concerns about inflation and currency volatility, Oyedele noted that these risks are outside the scope of tax policy. “Inflation and currency risks affect all investments and cannot be eliminated through tax laws,” he said. “Investors are expected to manage these risks as part of their broader strategies.”
He disclosed that the changes will take effect from January 1, 2026. “Details regarding application to existing investments, historical cost, and compliance requirements will be outlined in the implementation guidelines, with inputs from stakeholders,” he said.
Summing up the reforms, Oyedele noted that the new CGT structure protects small investors and promotes equity in taxation. “The reforms make CGT fairer, protect small investors, align Nigeria with global best practice, and provide wider tax reliefs that benefit businesses more than the limited CGT collections,” he said.
