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.
𝐐1. 𝐖𝐡𝐚𝐭 𝐢𝐬 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐠𝐚𝐢𝐧𝐬 𝐭𝐚𝐱 (𝐂𝐆𝐓)?
CGT is a tax charged on the profit (or “gain”) 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.
𝐐2. 𝐒𝐨 𝐰𝐡𝐲 𝐡𝐚𝐬 𝐭𝐡𝐞 𝐂𝐆𝐓 𝐫𝐚𝐭𝐞 𝐛𝐞𝐞𝐧 𝐢𝐧𝐜𝐫𝐞𝐚𝐬𝐞𝐝 𝐟𝐫𝐨𝐦 10% 𝐭𝐨 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%.
𝐐3. 𝐖𝐡𝐲 𝐰𝐚𝐬 𝐭𝐡𝐢𝐬 𝐜𝐡𝐚𝐧𝐠𝐞 𝐢𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐞𝐝?
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.
𝐐4. 𝐇𝐨𝐰 𝐝𝐨𝐞𝐬 𝐭𝐡𝐞 𝐧𝐞𝐰 𝐥𝐚𝐰 𝐛𝐞𝐧𝐞𝐟𝐢𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬?
-CGT only applies to net gains, since capital losses can be offset against capital gains.
-Proceeds from sales not exceeding ₦150 million annually where the gains are not more than ₦10 million, are exempt. This means about 99% of individual investors are effectively exempt.
-Where the proceeds exceed the exemption threshold, CGT is not due if such proceeds are reinvested into the shares of a Nigerian company.
-Institutional investors such as pension funds are exempt from CGT, just as they are from corporate income tax.
-Companies undergoing reorganisations, mergers, or restructurings are not subject to CGT on those transactions.
𝐐5. 𝐈𝐬 𝐭𝐡𝐢𝐬 𝐫𝐞𝐟𝐨𝐫𝐦 𝐦𝐞𝐚𝐧𝐭 𝐭𝐨 𝐢𝐧𝐜𝐫𝐞𝐚𝐬𝐞 𝐠𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐫𝐞𝐯𝐞𝐧𝐮𝐞?
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 ₦52 billion from CGT in 2024 compared to over ₦15 trillion from CIT and VAT. The reduced CIT rate and broader VAT credit is estimated to benefit businesses in the region of ₦4.5 trillion.
𝐐6. 𝐖𝐡𝐚𝐭 𝐚𝐛𝐨𝐮𝐭 𝐟𝐨𝐫𝐞𝐢𝐠𝐧 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬?
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.
𝐐7. 𝐖𝐢𝐥𝐥 𝐭𝐡𝐞𝐬𝐞 𝐜𝐡𝐚𝐧𝐠𝐞𝐬 𝐦𝐚𝐤𝐞 𝐍𝐢𝐠𝐞𝐫𝐢𝐚 𝐥𝐞𝐬𝐬 𝐚𝐭𝐭𝐫𝐚𝐜𝐭𝐢𝐯𝐞 𝐟𝐨𝐫 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭?
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 Nigeria’s 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.
𝐐8. 𝐃𝐨𝐞𝐬 𝐭𝐡𝐞 𝐂𝐆𝐓 𝐫𝐞𝐟𝐨𝐫𝐦 𝐚𝐩𝐩𝐥𝐲 𝐨𝐧𝐥𝐲 𝐭𝐨 𝐭𝐡𝐞 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐦𝐚𝐫𝐤𝐞𝐭?
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.
𝐐9. 𝐃𝐨 𝐭𝐡𝐞 𝐫𝐞𝐟𝐨𝐫𝐦𝐬 𝐚𝐝𝐝𝐫𝐞𝐬𝐬 𝐢𝐧𝐟𝐥𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐞𝐱𝐜𝐡𝐚𝐧𝐠𝐞 𝐫𝐚𝐭𝐞 𝐫𝐢𝐬𝐤𝐬?
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.
𝐐10. 𝐖𝐡𝐞𝐧 𝐝𝐨 𝐭𝐡𝐞𝐬𝐞 𝐜𝐡𝐚𝐧𝐠𝐞𝐬 𝐭𝐚𝐤𝐞 𝐞𝐟𝐟𝐞𝐜𝐭?
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.
𝐊𝐞𝐲 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲: 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.
