𝐖𝐡𝐚𝐭 𝐘𝐨𝐮 𝐍𝐞𝐞𝐝 𝐭𝐨 𝐊𝐧𝐨𝐰 𝐀𝐛𝐨𝐮𝐭 𝐭𝐡𝐞 𝐍𝐞𝐰 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐆𝐚𝐢𝐧𝐬 𝐓𝐚𝐱 𝐑𝐮𝐥𝐞𝐬 𝐚𝐧𝐝 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐌𝐚𝐫𝐤𝐞𝐭 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐢𝐧 𝐒𝐡𝐚𝐫𝐞𝐬

By Ikugbadi Oluwasegun

From 𝘵𝘩𝘦 𝘗𝘳𝘦𝘴𝘪𝘥𝘦𝘯𝘵𝘪𝘢𝘭 𝘍𝘪𝘴𝘤𝘢𝘭 𝘗𝘰𝘭𝘪𝘤𝘺 & 𝘛𝘢𝘹 𝘙𝘦𝘧𝘰𝘳𝘮𝘴 𝘊𝘰𝘮𝘮𝘪𝘵𝘵𝘦𝘦

𝐎𝐯𝐞𝐫𝐯𝐢𝐞𝐰

Recent discussions around the impact of the Capital Gains Tax (CGT) reform on the capital market have included some misinterpretations and misinformation. While detailed implementation guidelines will be provided through official regulations, it is important to clarify the critical issues at this stage.

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.

𝐑𝐞𝐟𝐨𝐫𝐦 𝐎𝐛𝐣𝐞𝐜𝐭𝐢𝐯𝐞𝐬

𝑹𝒆𝒅𝒖𝒄𝒆 𝒊𝒏𝒗𝒆𝒔𝒕𝒎𝒆𝒏𝒕 𝒓𝒊𝒔𝒌 – by allowing deductions for capital losses and other investment-related costs.
𝑷𝒓𝒐𝒕𝒆𝒄𝒕 𝒔𝒎𝒂𝒍𝒍 𝒂𝒏𝒅 𝒊𝒏𝒔𝒕𝒊𝒕𝒖𝒕𝒊𝒐𝒏𝒂𝒍 𝒊𝒏𝒗𝒆𝒔𝒕𝒐𝒓𝒔 – by providing exemptions for retail investors and tax-exempt institutions such as Pension Funds (PFAs) and Real Estate Investment Trusts (REITs).
𝑯𝒂𝒓𝒎𝒐𝒏𝒊𝒔𝒆 𝒂𝒏𝒅 𝒔𝒊𝒎𝒑𝒍𝒊𝒇𝒚 𝒕𝒂𝒙 𝒂𝒅𝒎𝒊𝒏𝒊𝒔𝒕𝒓𝒂𝒕𝒊𝒐𝒏 – by aligning CGT with income tax rules to promote progressivity, consistency, and ease of compliance.

𝐊𝐞𝐲 𝐂𝐡𝐚𝐧𝐠𝐞𝐬

1. The flat 10% CGT rate has been replaced with progressive income tax rates ranging from 0% to 30%, depending on the investor’s overall income or profit level.
2. The top rate of 30%, which applies to large corporate investors, is expected to be reduced to 25% under the broader corporate tax reform.
3. Investors may now deduct certain costs that were previously disallowed under the old CGT regime ensuring that they are not taxed on a net loss position.

𝐄𝐱𝐞𝐦𝐩𝐭𝐢𝐨𝐧𝐬

The following transactions qualify for exemption under the new CGT framework:

1. Disposals within 12 months where total sales proceeds do not exceed ₦150 million and total gains do not exceed ₦10 million.
2. Reinvestment of proceeds into shares of Nigerian companies within 12 months qualifies for full exemption where the general exemption threshold is exceeded.
3. Capital gains from foreign share disposals that are repatriated into Nigeria through CBN-authorised channels.
4. Institutional investors that enjoy corporate income tax exemption such as PFAs, REITs and NGOs are also exempted from CGT.
5. Small companies with turnover not exceeding ₦100 million and total fixed assets not more than ₦250 million pay 0% CGT.
6. Gains from investment in a labeled startup by venture capitalist, private equity fund, accelerators or incubators.

𝐃𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐆𝐚𝐢𝐧𝐬

For the purpose of CGT effective from 1 January 2026, the cost base for existing investments will be reset to the higher of:

a) the actual acquisition cost; and

b) the closing market price as at 31 December 2025.

This ensures fairness and prevents the application of the new rule to gains accrued before the new law takes effect.

𝐀𝐥𝐥𝐨𝐰𝐚𝐛𝐥𝐞 𝐃𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧𝐬

Investors can now deduct a wider range of legitimate costs, including:

1. Realised capital losses on share disposals.
2. Transaction charges such as brokerage fees and regulatory levies.
3. Expenses such as margin interest and realised foreign exchange losses proved to be incidental to the investment while exchange gains would be treated as taxable.

𝐑𝐞𝐠𝐢𝐬𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐂𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞

• Resident investors are required to register for tax and obtain a Tax ID.
• Non-resident investors who earn only passive income (e.g. dividends or capital gains) are not required to obtain a Tax ID.
• Self-assessment is the default compliance model, though regulations may be issued to introduce withholding or presumptive deductions at source through brokers or exchanges.
• All applicable taxes are to be paid in Naira.

𝐅𝐢𝐥𝐢𝐧𝐠 𝐚𝐧𝐝 𝐏𝐚𝐲𝐦𝐞𝐧𝐭 𝐃𝐞𝐚𝐝𝐥𝐢𝐧𝐞𝐬

𝑰𝒏𝒅𝒊𝒗𝒊𝒅𝒖𝒂𝒍𝒔 – on or before 31 March of the following year.

𝑪𝒐𝒎𝒑𝒂𝒏𝒊𝒆𝒔 – within six months after the financial year-end.

𝑵𝒐𝒏-𝒓𝒆𝒔𝒊𝒅𝒆𝒏𝒕 𝒊𝒏𝒗𝒆𝒔𝒕𝒐𝒓𝒔 – upon disposal of shares, except where reinvestment within the same year is expected. Brokers or exchanges may be authorised to deduct CGT at source.

𝐀𝐝𝐦𝐢𝐧𝐢𝐬𝐭𝐫𝐚𝐭𝐢𝐨𝐧

• Resident individuals are required to pay CGT to their state of residence in Nigeria.
• Resident companies are to file returns and remit applicable CGT to the Nigeria Revenue Service (NRS).
• Nonresident investors are to pay any applicable CGT to the NRS directly or through an appointed tax withholding agent.

𝐀𝐝𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐂𝐥𝐚𝐫𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬

𝑪𝒐𝒓𝒑𝒐𝒓𝒂𝒕𝒆 𝒓𝒆𝒐𝒓𝒈𝒂𝒏𝒊𝒔𝒂𝒕𝒊𝒐𝒏𝒔 – mergers, acquisitions, or internal restructurings as stipulated under the Nigeria Tax Act 2025 are exempt from CGT.

𝑻𝒓𝒂𝒏𝒔𝒊𝒕𝒊𝒐𝒏 𝒂𝒓𝒓𝒂𝒏𝒈𝒆𝒎𝒆𝒏𝒕𝒔 – gains earned on shares up to 31 December 2025 will be grandfathered and only taxed upon disposal where applicable, based on the law as at that date.

𝑹𝒆𝒄𝒐𝒓𝒅 𝒌𝒆𝒆𝒑𝒊𝒏𝒈 – investors are expected to maintain documentation of acquisition costs, sales proceeds, and related expenses for audit and verification.

𝑷𝒐𝒍𝒊𝒄𝒚 𝒊𝒏𝒕𝒆𝒏𝒕 – 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.

𝐈𝐧 𝐚 𝐧𝐮𝐭𝐬𝐡𝐞𝐥𝐥:

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 realised gains that are not re-invested.