Some stakeholders have expressed concerns regarding the changes introduced to the capital gains tax regime under the new tax reform laws effective from 1 January 2026.
This note provides context to the reform and clarifies the issues that are frequently raised.
๐1. ๐๐ก๐๐ญ ๐ข๐ฌ ๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐ ๐๐ข๐ง๐ฌ ๐ญ๐๐ฑ (๐๐๐)?
CGT is a tax charged on the profit (or โgainโ) made from the disposal of certain assets such as shares and real estate. Only the gain, not the total proceeds, is subject to tax. A flat rate of 10% applies to all chargeable gains under the current laws.
๐2. ๐๐จ ๐ฐ๐ก๐ฒ ๐ก๐๐ฌ ๐ญ๐ก๐ ๐๐๐ ๐ซ๐๐ญ๐ ๐๐๐๐ง ๐ข๐ง๐๐ซ๐๐๐ฌ๐๐ ๐๐ซ๐จ๐ฆ 10% ๐ญ๐จ 30%?
The CGT rate has not been increased to 30%. Instead, CGT has been integrated into personal and corporate income tax. This means the tax you pay on capital gains depends on your overall income level or company profits, making the system more progressive. Effectively, the applicable CGT rate under the new laws ranges from 0% to 30%.
๐3. ๐๐ก๐ฒ ๐ฐ๐๐ฌ ๐ญ๐ก๐ข๐ฌ ๐๐ก๐๐ง๐ ๐ ๐ข๐ง๐ญ๐ซ๐จ๐๐ฎ๐๐๐?
The reform makes CGT progressive so that low-income earners either pay no CGT or pay less, while higher-income earners contribute a fairer share. It also helps reduce distortions where income could previously be misclassified as capital to enjoy a lower, flat CGT rate.
๐4. ๐๐จ๐ฐ ๐๐จ๐๐ฌ ๐ญ๐ก๐ ๐ง๐๐ฐ ๐ฅ๐๐ฐ ๐๐๐ง๐๐๐ข๐ญ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐จ๐ซ๐ฌ?
โข CGT only applies to net gains, since capital losses can be offset against capital gains.
โข Proceeds from sales not exceeding โฆ150 million annually where the gains are not more than โฆ10 million, are exempt. This means about 99% of individual investors are effectively exempt.
โข Where the proceeds exceed the exemption threshold, CGT is not due if such proceeds are reinvested into the shares of a Nigerian company.
โข Institutional investors such as pension funds are exempt from CGT, just as they are from corporate income tax.
โข Companies undergoing reorganisations, mergers, or restructurings are not subject to CGT on those transactions.
๐5. ๐๐ฌ ๐ญ๐ก๐ข๐ฌ ๐ซ๐๐๐จ๐ซ๐ฆ ๐ฆ๐๐๐ง๐ญ ๐ญ๐จ ๐ข๐ง๐๐ซ๐๐๐ฌ๐ ๐ ๐จ๐ฏ๐๐ซ๐ง๐ฆ๐๐ง๐ญ ๐ซ๐๐ฏ๐๐ง๐ฎ๐?
No. CGT revenue is historically very small, less than 2% of what is collected from Companies Income Tax (CIT) and Value Added Tax (VAT). The reforms are about harmonisation, fairness and efficiency. In fact, businesses will benefit far more from reduced CIT rates and broader VAT input credits. For instance, the FIRS collected only โฆ52 billion from CGT in 2024 compared to over โฆ15 trillion from CIT and VAT. The reduced CIT rate and broader VAT credit is estimated to benefit businesses in the region of โฆ4.5 trillion.
๐6. ๐๐ก๐๐ญ ๐๐๐จ๐ฎ๐ญ ๐๐จ๐ซ๐๐ข๐ ๐ง ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐จ๐ซ๐ฌ?
Most foreign investors can claim tax credits in their home country for taxes paid in Nigeria, under double taxation agreements or unilateral tax relief. This means CGT paid in Nigeria will often not be an additional cost.
๐7. ๐๐ข๐ฅ๐ฅ ๐ญ๐ก๐๐ฌ๐ ๐๐ก๐๐ง๐ ๐๐ฌ ๐ฆ๐๐ค๐ ๐๐ข๐ ๐๐ซ๐ข๐ ๐ฅ๐๐ฌ๐ฌ ๐๐ญ๐ญ๐ซ๐๐๐ญ๐ข๐ฏ๐ ๐๐จ๐ซ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ?
No. The new rules are consistent with international best practice. Many countries already apply progressive tax treatment to capital gains, and exemptions for small investors and reinvestment make Nigeriaโs regime competitive. When considered holistically, the lower CIT rate and broader input VAT credit in the new tax laws will improve profitability of companies, equity valuations, and enhance overall investor returns.
๐8. ๐๐จ๐๐ฌ ๐ญ๐ก๐ ๐๐๐ ๐ซ๐๐๐จ๐ซ๐ฆ ๐๐ฉ๐ฉ๐ฅ๐ฒ ๐จ๐ง๐ฅ๐ฒ ๐ญ๐จ ๐ญ๐ก๐ ๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐ฆ๐๐ซ๐ค๐๐ญ?
No. The CGT reform applies to all chargeable assets, unless specifically exempt. Examples of exemptions in addition to the threshold for shares include:
-Individuals selling up to two personal vehicles per year.
-The sale of an owner-occupied residential property.
๐9. ๐๐จ ๐ญ๐ก๐ ๐ซ๐๐๐จ๐ซ๐ฆ๐ฌ ๐๐๐๐ซ๐๐ฌ๐ฌ ๐ข๐ง๐๐ฅ๐๐ญ๐ข๐จ๐ง ๐๐ง๐ ๐๐ฑ๐๐ก๐๐ง๐ ๐ ๐ซ๐๐ญ๐ ๐ซ๐ข๐ฌ๐ค๐ฌ?
Not directly. Inflation and currency risks affect all investments and cannot be eliminated through tax laws. Investors are expected to manage these risks as part of their broader investment strategies.
๐10. ๐๐ก๐๐ง ๐๐จ ๐ญ๐ก๐๐ฌ๐ ๐๐ก๐๐ง๐ ๐๐ฌ ๐ญ๐๐ค๐ ๐๐๐๐๐๐ญ?
The changes will come into effect from 1 January 2026. Details regarding application to existing investments, historical cost, and compliance requirements will be covered under implementation guidelines with inputs from stakeholders.
๐๐๐ฒ ๐๐๐ค๐๐๐ฐ๐๐ฒ: 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.
– ๐ท๐๐๐๐๐ ๐๐๐๐๐๐ ๐ญ๐๐๐๐๐ ๐ท๐๐๐๐๐ ๐๐๐ ๐ป๐๐ ๐น๐๐๐๐๐๐ ๐ช๐๐๐๐๐๐๐e.
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