“It Protects Small Investors”: FG Clarifies New Capital Gains Tax Rules

• The federal government has clarified the new Capital Gains Tax rules to dispel misinformation and misinterpretations
• The clarification, offered by the Presidential Tax Committee, includes rules on exemptions, deductions, and compliance methods
• The chairman of the committee said guidelines for the implementation of the reforms will be provided through official regulations

Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, money market, tech and macroeconomic trends in Nigeria

The Presidential Fiscal Policy and Tax Reforms Committee has released details of Nigeria’s new Capital Gains Tax (CGT) framework, clarifying that the reform is designed to reduce investment risks and protect small investors, among other objectives.

The committee chairman, Taiwo Oyedele, who gave the clarification in a post on his official X handle, added that guidelines for implementation will be provided through official regulations.

Oyedele noted that reactions to the new CGT framework on the capital market, which is expected to take effect on January 1, 2026, have included some misinterpretations and misinformation, hence the need for clarity.

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He explained that the revised framework replaces the old flat CGT rate of 10% with progressive rates ranging from 0% to 30%, depending on the investor’s income and profit levels.

He said:

“The top rate of 30%, which applies to large corporate investors, is expected to be reduced to 25% under the broader corporate tax reform."

He stressed that the new framework permits investors to deduct such costs as capital losses and transaction charges, an arrangement that was not allowed under the old CGT regime.

Exemptions for small, institutional investors

Meanwhile, the government provided exemptions from CGT to small and institutional investors to protect them from losses. The exemptions include:

• Small companies with turnovers not exceeding ₦100 million and total fixed assets of less than ₦250 million.
• Disposals within 12 months where total sales proceeds do not exceed ₦150 million and total gains do not exceed ₦10 million.
• Reinvestment of proceeds into shares of Nigerian companies within 12 months where the general exemption threshold is exceeded.
• Capital gains from foreign share disposals that are repatriated into Nigeria through CBN-authorised channels.
• Institutional investors that enjoy corporate income tax exemption: pension funds, real estate investment trusts (REITs), and nonprofits (NGOs).
• Gains from investment in a labelled startup by venture capitalists, private equity funds, accelerators or incubators.

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To ensure fairness in the implementation of the CGT, Oyedele noted that the cost base for existing investments will be reset to the higher of the actual acquisition cost or the closing market price as of December 31, 2025.

Investors to conduct self-assessment

Oyedele added that investors and traders can adopt self-assessment as the default compliance model, while CGT can be deducted at source by brokers..

He said:

“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.”

New tax laws to take effect in January

Legit.ng reported that new tax laws enacted by the administration of President Bola Tinubu will come into effect on January 1, 2025.

The laws offer a wide range of exemptions and reliefs to Nigerians earning modest incomes and small businesses.

Workers earning below N20 million annually will be eligible for reduced Pay As You Earn (PAYE), while Nigerians with an annual gross income of up to N1.2 million will be exempt from income tax.

Source: Legit.ng