Signed into law in June 2025, the Act represents the most substantial overhaul of Nigeria’s tax system in decades. Among its most notable provisions are the tripling of the Capital Gains Tax (CGT) for companies from 10% to 30%, the introduction of a 4% development levy on corporate profits, a 15% minimum effective tax rate for large multinationals, and a comprehensive revision of tax exemptions for Free Trade Zones (FTZs).
Dele Kelvin Oye, Chairman of the Alliance for Economic Research and Ethics LTD/GTE and Nigeria-Turkiye Business Council, raised alarms over the Act in a statement yesterday, describing it as the “most significant fiscal reform in a generation.” He warned that the new system could severely curtail investment, threatening Nigeria’s long-term economic prospects.
“The tripling of the Capital Gains Tax is perhaps the most explosive provision of the Act,” Oye said. “It drastically reduces potential returns, making Nigeria significantly less attractive compared to regional competitors.”
Oye, who also serves as Life Vice-President and 22nd National President of NACCIMA, highlighted the tension between fiscal consolidation and investment promotion. “The government faces volatile oil revenues, rising debt obligations, and urgent development needs,” he explained. “While the Act seeks to streamline tax administration, curb evasion, and broaden the revenue base, policy must be judged by outcomes, not intentions. The risk is that short-term revenue goals could come at the expense of long-term growth.”
Analysts note that the development levy, replacing multiple smaller levies including the Tertiary Education Tax and National Information Technology Development Levy, is intended to fund national infrastructure and social projects. Yet, questions remain over its impact on corporate profitability and investment incentives, particularly as neighboring countries like Ghana, Ethiopia, and Rwanda aggressively pursue business-friendly reforms to attract capital under the African Continental Free Trade Area (AfCFTA).
The Act also aligns the CGT rate for companies with the Companies Income Tax, applying the 30% rate to profits from the sale of capital assets, including stocks, real estate, and intellectual property. For individuals, capital gains will be taxed according to progressive income tax rates, reaching up to 25%.
Oye and other stakeholders are calling for recalibration of the Act to balance revenue generation with the promotion of private sector growth. “Ultimately, Nigeria must ensure that fiscal reform does not erect barriers that drive capital away,” he said. “The 2025 Tax Act provides an opportunity to strengthen the economy—but it must be implemented in a way that fosters investment, innovation, and competitiveness.”
As the January 1 implementation date approaches, businesses, economists, and policymakers are closely monitoring the rollout, with the potential impacts of the 2025 Tax Act set to shape Nigeria’s investment climate and broader economic trajectory for years to come.