Looming tax on Nigerian stocks rattles investors. Govt tries to clarify again

The federal government’s tax reform committee has published more details of a new capital gains tax (CGT) system that will take effect from January 1, 2026, promising what it calls a “fairer and more investor-friendly” framework.

But while officials say the reform will protect small investors and boost market confidence, the plan has stirred anxiety among market participants who fear it could tighten reporting requirements and widen the tax net.

The information was released on Monday by the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, as part of Nigeria’s sweeping tax overhaul aimed at ensuring nearly all citizens and businesses pay their fair share.

From flat to progressive

Under the new rules, the current 10% flat rate on capital gains will be scrapped. In its place, Nigeria will adopt a progressive tax scale of 0% to 30%, depending on a taxpayer’s overall income or profit.

Large companies, however, could see their top rate fall to 25% once the broader corporate tax reform takes effect, according to the committee.

Officials argue that the system aligns with international practice and prevents small investors from paying the same rate as major corporations. Critics, however, say implementation details will determine whether the reform actually eases or adds to investors’ tax burden.

Who’s exempt

The committee says the framework includes safeguards for retail and institutional investors. Among those excluded from the new CGT regime are:

a) Individuals whose annual disposals are under ₦150 million and total gains below ₦10 million;

b) Investors who reinvest proceeds in Nigerian companies within 12 months;

c) Pension funds, REITs, and NGOs already exempt from income tax;

d) Small companies with turnover below ₦100 million or assets under ₦250 million;

e) Foreign investors who repatriate proceeds through CBN-approved channels; and

f) Venture funds and private equity investors that back registered startups.

The committee insists these carve-outs will “protect small players and deepen participation in the capital market.”

Resetting investment value

A key element of the reform is a reset of investment values.
From January 2026, the “cost base” for calculating taxable gains will be whichever is higher — the original purchase price or the market price as of December 31, 2025.

That reset, the committee says, will prevent taxing profits made before the new law takes effect, a move it describes as “ensuring fairness.”

Allowable deductions

For the first time, investors will be allowed to deduct losses and expenses that are directly linked to their investments. These include:

a) Capital losses on share disposals,

b) Brokerage and exchange fees,

c) Margin interest, and

d) Verified foreign-exchange losses.

Such deductions were previously restricted under the old regime, often leading investors to pay taxes even when they lost money.

Compliance and payment

Resident investors will be required to obtain a Tax Identification Number (TIN) and file annual CGT returns — by March 31 for individuals and within six months of year-end for companies.

Non-resident investors who earn only passive income, such as dividends or capital gains, will not need a TIN. The government may also authorise brokers or exchanges to deduct CGT at source once trading systems are ready.

All payments will be made in naira, and individuals will remit taxes to their state of residence, while companies and non-residents will pay to the new Nigeria Revenue Service (NRS).

Transition and corporate deals

The committee clarified that mergers, acquisitions, and internal restructurings will remain exempt under the 2025 Tax Act. Gains accrued up to December 31, 2025 will also be “grandfathered” and taxed, if at all, under the existing law.

Investors are expected to keep detailed records of acquisition costs and sales to validate claims in case of audits.

Broader reform goals

Mr. Oyedele said the policy is “not revenue-driven” but designed to harmonize taxes and “make the system fairer and simpler.”

He added that the framework “reduces investment risk and rewards long-term investors.”

Still, investors and analysts are waiting for the implementation guidelines, which will determine how smoothly the changes are applied – and whether Nigeria’s capital market finds the new rules as friendly as promised.