Amid rising opposition to the upward review of the Capital Gains Tax (CGT) by stakeholders, especially in the capital market, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has clarified that the new CGT framework represents a major improvement over the existing law.

Oyedele, writing on his X handle, expressed concern over what he described as widespread misrepresentation and misinformation surrounding the proposed tax reform, which is scheduled to take effect on January 1, 2026.

Analysts and investors have criticised the new regime, describing it as a disincentive to investment and a threat to Nigeria’s competitiveness in the global equity market.

They argued that while revenue generation is important, tax policies must be balanced, predictable, and fair.

Only recently, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, assured stockbrokers that the Federal Government would review the policy in response to public concerns.

Clarifying key issues, Oyedele said the reform would make investment in the Nigerian capital market more attractive, reduce investment risks, and ensure fair treatment of legitimate costs incurred by investors.

“The reform promotes equity and confidence in the market, not the reverse,” he said.

He explained that the objectives of the reform include reducing investment risk by allowing deductions for capital losses and other related costs; protecting small and institutional investors through exemptions for retail investors and tax-exempt entities such as Pension Funds (PFAs) and Real Estate Investment Trusts (REITs); and harmonising CGT with income tax rules to promote fairness and ease of compliance.

Under the new regime, the flat 10 percent CGT rate will be replaced with progressive rates ranging from 0 to 30 percent, depending on an investor’s total income or profit level.

Oyedele noted that the top rate of 30 percent, applicable to large corporate investors, is expected to drop to 25 percent under the broader corporate tax reform.

He added that investors would now be able to deduct legitimate costs previously disallowed under the old regime, ensuring they are not taxed on a net loss position.

Exemptions under the new law include disposals within 12 months where total proceeds do not exceed ₦150 million and total gains are under ₦10 million; reinvestment of proceeds into shares of Nigerian companies within 12 months, which qualifies for full exemption if the general threshold is exceeded; capital gains from foreign share disposals repatriated through CBN-authorised channels; institutional investors such as PFAs, REITs, NGOs, and small companies with turnover not exceeding ₦100 million and total fixed assets below ₦250 million; and gains from investments in startups by venture capital, private equity funds, accelerators, or incubators.

Oyedele explained that to determine capital gains, 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, to ensure fairness and prevent retroactive taxation.

Under the revised law, investors can deduct a wider range of costs, including realised capital losses, brokerage fees, regulatory levies, margin interest, and verified foreign exchange losses. Exchange gains, however, will remain taxable.

He noted that corporate reorganisations such as mergers, acquisitions, or internal restructurings, as stipulated under the Nigeria Tax Act 2025, would be exempt from CGT.

“Gains earned on shares up to December 31, 2025, will be grandfathered and only taxed upon disposal based on the law applicable at that time,” he added.

Oyedele stressed that the reform was not designed to raise revenue but to promote fairness, competitiveness, long-term stability, and investor confidence in Nigeria’s capital markets.

“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 investors contribute their fair share on realised gains that are not reinvested,” he said.