With a few weeks to the January 1 rollout of the 2025 Nigeria Tax Act, there is growing concern among the nation’s business community, industry experts, and other stakeholders that the new tax regime could trigger unprecedented capital flight and undermine Nigeria’s investment climate.
The Act, signed into law in June 2025, introduces sweeping changes to Nigeria’s fiscal framework in decades, including increase in the Capital Gains Tax (CGT) for companies from 10 per cent to 30 per cent, a new 4 per cent Development Levy on profits, a 15 per cent Minimum Effective Tax Rate (ETR) for large multinationals, and a fundamental revision of tax exemptions for Free Trade Zones (FTZs).
The Chairman, Alliance for Economic Research and Ethics LTD/GTE and Chairman, Nigeria Turkiye Business Council, Dele Kelvin Oye, who noted that the tax reforms represent the most significant overhaul of the nation’s fiscal landscape in a generation, said the new system threatened to cripple the very investment and business growth that Nigeria desperately needs to secure its long-term economic future.
Oye, who is also the Life Vice-President & 22nd National President, NACCIMA, while describing the tripling of CGT by 200 per cent as the most explosive provision of the act, said the new rate drastically reduces potential returns, making Nigeria significantly less attractive than regional competitors.
He said: “Nigeria stands at a critical juncture. Faced with volatile oil revenues, mounting debt service obligations, and the pressing need to fund national development, the government has turned to comprehensive fiscal reform as a primary tool for economic stabilisation.”
Oye, who is also the immediate past Chairman of the Organised Private Sector of Nigeria, added, “Ultimately, we will propose a series of actionable policy recommendations aimed at recalibrating the Act to promote a symbiotic relationship between government revenue and private enterprise, ensuring that Nigeria remains not just open for business, but a magnet for transformative investment.”
On policy recommendations, Oye suggested, among others, “To mitigate the negative impacts and harness the potential positives of the 2025 Tax Act, the government should consider the following strategic adjustments.
“The 30 per cent CGT rate should be immediately reconsidered. A more moderate, phased increase, perhaps to 15 per cent initially, with a future review based on empirical data of its impact on investment flows, would be a far more prudent approach. Similarly, the four per cent Development Levy could be tiered, with a lower rate for SMEs and export-oriented industries, to reduce its drag on growth sectors.
“Rather than a blanket removal of exemptions, the government should develop a new, modern FTZ incentive framework. This could include offering a reduced CIT rate (e.g., 10-15%) for a fixed period for businesses engaged in high-value activities such as advanced manufacturing, ICT development, and pharmaceuticals. Clarity is paramount: a new, clear, and legislatively-backed set of rules must be communicated swiftly to restore investor confidence.”
