By Seun Ibiyemi
The recently introduced Capital Gains Tax (CGT) is expected to make Nigeria’s capital market more competitive and investor-friendly, according to officials and market experts.
The remarks were made during an online public lecture organized by the Capital Market Academics of Nigeria (CMAN) on Wednesday.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Prof. Taiwo Oyedele said that CGT, a tax on the profit made from the sale of an asset that has increased in value is one of the lowest levies compared to Companies Income Tax (CIT) and Value Added Tax (VAT).
Oyedele said that from 2014 to 2024, CGT contributed less than one per cent of total CIT and VAT collections, with CGT at N276 billion compared to N26 trillion from CIT and N22 trillion from VAT.
“The new tax policy, combined with the reduction of CIT from 30 per cent to 25 per cent, will make companies more profitable, leading to higher valuations that are expected to far exceed the incremental CGT,” Oyedele said.
He further noted that the reform provides CGT exemptions for retail investors, pension funds, Real Estate Investment Trusts (REITs), security lending, and reorganisation transactions.
Other measures include deductions for capital losses, elimination of Withholding Tax on bonus shares, stamp duty exemptions for stock transfer documents, and harmonisation of levies across agencies to lower business costs and enhance cash flow.
The Chairman of the Nigerian Exchange Group (NGX), Dr. Umaru Kwairanga acknowledged that CGT is not a new concept but cautioned that market perceptions of the tax could influence investor behaviour.
“Perception matters a lot in financial markets and can move markets long before any real action takes place,” he said, referring to recent market volatility.
President of the Chartered Institute of Taxation of Nigeria (CITN), Innocent Ohagwu said the CGT reform would benefit the capital market and urged stakeholders to allow the policy to operate before passing judgment.
An economist, Prof. Sheriffdeen Tella raised concerns that the tax on private bonds could encourage investors to shift more funds into government securities.
Meanwhile, former FIRS Chairman, Muhammad Nami called for broader stakeholder engagement and suggested explaining the policy in local languages to help citizens make informed investment decisions.
The consensus among experts is that if properly implemented and communicated, the CGT reform will enhance transparency, reduce excessive levies, and strengthen Nigeria’s capital market, boosting both investor confidence and economic growth.