Under the reform, the CGT rate for corporate entities will rise from the previous flat 10% to 30%, aligning it with the standard Companies Income Tax (CIT) rate. For individuals, capital gains will be taxed according to progressive personal income tax (PIT) bands, ranging from 0% to 25%, although the effective rate for corporate and individual transactions is expected to settle at 25% when operational next year. The tax will apply to gains from the sale of assets including equities, properties, digital assets, and other investments.
The announcement has already triggered concern among portfolio investors, many of whom are reportedly considering offloading assets before the year-end to take advantage of the existing 10% CGT rate. This cautious sentiment comes against the backdrop of recent turbulence on the Nigerian Exchange (NGX), which saw roughly N1.8 trillion wiped off market value over just four trading sessions due to panic-driven sell-offs.
Business leaders and capital market operators argue that the revised CGT regime could dampen investment appetite and undermine Nigeria’s competitiveness relative to other emerging markets. Analysts warn that sectors heavily reliant on capital gains, such as venture capital, real estate, and equity markets, may experience disruptions if the new tax policy is implemented without complementary incentives to stimulate growth.
Addressing some of these concerns, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, clarified that the 25% CGT will primarily apply to proceeds from share sales reinvested in fixed-income securities or other non-equity assets. He added that retail investors would largely be unaffected due to the N150 million annual exemption threshold, which excludes approximately 99.9% of individual investors from the tax.
Despite these reassurances, critics remain unconvinced. In an interview , Dr. Muda Yusuf, Founder and CEO of the Centre for the Promotion of Private Enterprise (CPPE), described the CGT increase as disproportionately high. “Even if the government had to introduce an increase in Capital Gains Tax, 30% is on the high side,” he said, emphasizing that the move appears more revenue-driven than investment-conscious.
Dr. Yusuf highlighted the broader implications, warning that the policy could destabilize key investment sectors and discourage both domestic and foreign investors. “From an investment point of view, and given the role that portfolio flows play in stabilizing our macroeconomic environment, this is not such a great idea at this time. The focus seems more on revenue, and the 200% increase in CGT is excessive by any standard,” he added.
The controversy underscores the delicate balance policymakers must strike between generating government revenue and fostering a conducive environment for investment. With the CGT set to take effect in just over a year, market participants will be closely watching how the Federal Government addresses investor concerns while implementing its broader fiscal reforms.
Here’s a rewritten, expanded article section incorporating the “mixed outcome” perspective, seamlessly flowing from the earlier piece:
Analysts Predict Mixed Impact of Capital Gains Tax on Nigerian Markets
While concerns over Nigeria’s new Capital Gains Tax (CGT) dominate market discourse, some analysts see potential for both short-term disruption and medium-term benefits. Oluwaseun Adeniji, an Investment Banking Analyst at CardinalStone Partners, described the policy as likely to produce a mixed outcome.
According to Adeniji, the revised CGT is expected to trigger short-term sell pressure, leading to capital erosion and reduced participation in the equity market—a development that could unsettle investors in the near term. Many investors are reportedly considering selling assets before the end of 2025 to take advantage of the current 10% CGT rate and repurchasing in the new year, effectively resetting their cost base.
“As Nigeria’s revised CGT regime takes effect in January 2026, investors are reassessing their portfolios to mitigate potential tax exposure,” Adeniji explained. “While this strategy may create short-term sell-side pressure, the major concern for investors remains the risk of capital erosion and a decline in equity market participation, as after-tax returns could become less attractive.”
Despite the near-term challenges, Adeniji noted that the medium-term outlook could be more positive if the reforms are well managed. Clear valuation rules, policy consistency, and efficient implementation could enhance fiscal transparency and help balance government revenue objectives with sustaining investor confidence in Nigeria’s capital markets.
Foreign investors have also voiced unease over the new CGT provisions. In a virtual call organized by Standard Chartered Bank, several international investors questioned the economic rationale and investor sensitivity behind the reforms. Some described Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, as adopting a “surprisingly ideological” tone, suggesting the approach seemed more “socialist” than market-oriented.
Oyedele, however, defended the reforms, emphasizing that progressive taxation is designed to exempt lower-income earners while fairly taxing wealthier individuals, and insisted that the CGT should not be seen as a deterrent to investment. He added that feedback from participants who engaged after the virtual call rated the discussion nearly 90%, indicating broad recognition of the government’s efforts to clarify contentious provisions.
The debate underscores the delicate balancing act facing Nigeria’s policymakers: how to raise revenue and ensure fiscal transparency without undermining investment, capital market stability, or investor confidence. As the CGT takes effect in just over a year, all eyes will remain on how market participants respond and whether the reforms can achieve their intended economic objectives.