Nigeria’s capital market is in turmoil following recent issues over the upcoming 25% Capital Positive aspects Tax (CGT) on share disposals set to take impact in January 2026.
The nervousness stems from new clarifications made by Taiwo Oyedele, Chairman of the Presidential Fiscal Coverage and Tax Reforms Committee, throughout an engagement organized by the Nigerian Alternate Group (NGX) final month.
Oyedele defined that below the brand new rule, traders who promote shares and reinvest the proceeds in fixed-income securities or different non-equity belongings shall be topic to a 25% CGT.
He, nonetheless, famous that retail traders will largely be unaffected, because the N150 million annual exemption threshold successfully shields 99.9% of particular person gamers.
“Solely only a few huge traders cross that threshold, largely institutional gamers or high-net-worth people,” Oyedele stated.
Market fears and potential capital flight
Regardless of the exemption, capital market operators warn that the brand new tax might disrupt investor sentiment, particularly amongst international portfolio traders who’ve not too long ago proven renewed curiosity in Nigerian equities.
One market operator, who spoke on situation of anonymity, described the coverage as “poorly conceived,” warning that its ambiguities, retroactive computation, and steep charge might deter capital inflows and lift the price of fairness at a vital time when Nigeria is simply starting to get better investor confidence.
- “Its ambiguities, retroactivity, excessive charges, and publicity to international traders might deter capital flows, enhance the price of fairness, and in the end stall the funding cycle simply as Nigeria tries to pivot from stability to development,” the operator stated.
The skilled added that with clearer guidelines, reasonable charges, and cost-basis changes, the tax might nonetheless be carried out in a manner that helps moderately than undermines market development.
Different analysts say the issue runs deeper and lacks equity.
Below the present design, capital beneficial properties are calculated based mostly on historic value, not adjusted for inflation or foreign money depreciation.
“Which means traders could possibly be taxed on beneficial properties made years earlier than the legislation even existed,” one analyst defined.
- “South Africa in 2001 and India in 2018 each prevented this lure by resetting the price foundation to the market worth on the time of implementation, making certain solely future beneficial properties had been taxed. Nigeria ought to do the identical.”
This method, they warn, might result in double taxation and inflated liabilities, particularly in an inflationary surroundings the place the naira’s depreciation distorts actual beneficial properties.
Echoing related sentiments, Otunba Adetunji Oyebanji, CEO of 11 Plc, described the brand new regime, which additionally raises company CGT to 30% as probably punitive for companies.
- “We’re involved that the financial system is now extra delicate to excessive capital investments as a result of a number of the reliefs that existed earlier than are going to be eliminated,” Oyebanji stated, urging the federal government to have interaction stakeholders and introduce a transition interval to stop market shocks.
He famous that the mixture of upper charges and stricter reporting guidelines might impose heavy burdens on smaller enterprises whereas discouraging large-scale investments.
Issues over capital beneficial properties tax on equities should not new.
In 2023, whereas the proposal was nonetheless being debated, Sam Onukwue, Chairman of the Affiliation of Securities Dealing Homes of Nigeria (ASHON), advised Nairametrics that the reintroduction of CGT risked stifling the market.
- “Slightly than stifling the market with the re-introduction of CGT,” he stated, “the federal government ought to give attention to reversing the waning curiosity of international portfolio traders and attracting FDI by making a tax-friendly surroundings.”
Paradoxically, Taiwo Oyedele, now one of many tax’s chief defenders, as soon as shared related reservations.
In a 2022 presentation at an RCCG occasion, he warned that the ten% CGT launched below the Finance Act might discourage capital market funding, particularly given the concurrent expiration of tax exemptions on company bonds.
- “The tax could discourage funding within the capital market,” he stated on the time, “given the expiration of tax exemption on company bonds.”
Market efficiency and what’s at stake
The timing of the controversy is delicate, with the All-Share Index up 38% year-to-date as of September 2025. This extends a five-year streak of annual beneficial properties, the longest for the reason that 2000–2008 increase cycle.
Analysts worry that sudden coverage shifts such because the CGT rule might reverse these beneficial properties, triggering capital flight and eroding confidence simply as Nigeria seeks to draw long-term international funding.
Whereas the Federal Authorities goals to broaden its tax base and curb speculative capital motion, market stakeholders warn that poor design and abrupt implementation might ship the other impact.
They opine that it will probably scale back liquidity, discouraging participation, and undermining Nigeria’s repute as a reform-driven funding vacation spot.
As one analyst summed it up:
- “Tax reforms ought to promote development, not punish it. With out readability, equity, and engagement, this 25% CGT might turn out to be a self-inflicted wound.”
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