Nigeria’s capital market is bracing for turbulence as investors warn that a new 25 per cent Capital Gains Tax (CGT) on share disposals, set to take effect in January 2026, could trigger capital flight and reverse fragile gains in investor confidence.
The concerns followed clarifications made by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, during a Nigerian Exchange Group (NGX) engagement. Oyedele explained that investors who sell shares and reinvest proceeds in fixed-income securities or other non-equity assets would face a 25 per cent CGT.
He said retail investors would largely be exempt due to a 150 million naira annual threshold that shields 99.9 percent of individuals. “Only very few big investors cross that threshold, mostly institutional players or high-net-worth individuals,” he said.
But market operators say the exemptions have not calmed fears. One operator, speaking anonymously, described the policy as “poorly conceived,” warning that its ambiguities, retroactive basis, and steep rate could deter inflows.
“Its ambiguities, retroactivity, high rates, and exposure to foreign investors could deter capital flows, increase the cost of equity, and ultimately stall the investment cycle just as Nigeria tries to pivot from stability to growth,” the operator said.
Critics say the new regime unfairly calculates gains on historic cost without adjusting for inflation or naira depreciation, meaning investors could be taxed on paper gains made years earlier. Analysts point out that South Africa in 2001 and India in 2018 avoided this pitfall by resetting cost bases at the time of implementation.
Otunba Adetunji Oyebanji, CEO of 11 Plc, warned that raising corporate CGT to 30 percent while tightening compliance risks discouraging capital-intensive investments. “We are concerned that the economy is now more sensitive to high capital investments because some of the reliefs that existed before are going to be removed,” he said, calling for a transition period.
The concerns echo warnings made as early as 2023, when Sam Onukwue, Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), said reintroducing CGT could stifle the market. “Rather than stifling the market with the reintroduction of CGT, government should focus on reversing the waning interest of foreign portfolio investors,” he said at the time.
Ironically, Oyedele himself once shared similar caution. In a 2022 presentation, he said that a 10 per cent CGT introduced under the Finance Act could discourage investment, given the expiry of tax exemptions on corporate bonds.
The debate comes as the All-Share Index is up 38 per cent year-to-date, extending a five-year winning streak. Analysts warn that sudden policy shifts could erase these gains, drying up liquidity and weakening Nigeria’s reputation as a reform-friendly investment destination.
“Tax reforms should promote growth, not punish it,” one analyst summed up. “Without clarity, fairness, and engagement, this 25 percent CGT could become a self-inflicted wound.”
