The federal government has abolished the long-standing 10 per cent capital gains tax, consolidating it with the corporate income tax (CIT) regime, while retaining the latter at 30 per cent for medium and large companies, under the newly enacted Nigerian Tax Act (NTA), set to take effect from January 2026.

The CIT will continue to exempt small businesses—those with an annual turnover of N50 million or less and total fixed assets not exceeding N250 million—from taxation, maintaining a 0% rate for such entities.

According to the new law, tax shall be levied… in the case of a small company, at 0 per cent; and any other company, at the rate of 30 per cent.

Professional services firms, however, are excluded from the small business classification, regardless of turnover or asset size. The Act defines such firms as those offering specialised knowledge or skills, such as consulting or planning services. Artisans and vocational service providers are not captured in this clause.

The Act further imposes a 15 per cent minimum effective tax rate for companies falling below this threshold. Any business with an effective tax rate below 15 per cent must “recompute and pay an additional tax” to reach the benchmark, provided it is part of a multinational enterprise group or generates N20 billion or more in annual revenue.

The repeal of the Capital Gains Tax Act—effectively merging it into the broader corporate tax framework—comes amid ongoing tax reforms initiated by President Bola Tinubu’s administration.

Taiwo Oyedele, chair of the Presidential Committee on Fiscal Policy and Tax Reforms, had previously hinted at a downward review of the CIT to 25 per cent as part of efforts to improve Nigeria’s ease of doing business and attract investments.

In 2024, lawmakers floated proposals to reduce the CIT to 27.5 per cent by 2025 and subsequently 25 per cent by 2026, though the new Act appears to pause that trajectory, at least for now.

The reforms follow mounting pressure to streamline taxation in Africa’s largest economy, plagued by revenue shortfalls, high inflation, and a large informal sector.

As the January 2026 implementation date approaches, attention will turn to the government’s enforcement strategy and whether it will consider further revisions amid evolving fiscal realities.