What Capital Gains Tax (CGT) Is in Nigeria

Capital Gains Tax is a tax charged on the profit (gain) you make when you dispose of (sell or transfer) a chargeable asset, such as shares, equity instruments, goodwill, digital assets, or other investment property. It is levied on gains realised from such disposals, not on the total sale value.

Traditionally, the CGT was governed by the Capital Gains Tax Act (Cap. C1, Laws of the Federation of Nigeria), a law originally passed in 1967 and amended over time. Under that law, CGT was a flat 10% on capital gains for both individuals and companies.

Now, the tax has been administered by the Nigeria Revenue Service (NRS), which recently transitioned from Federal Inland Revenue Service (FIRS) as part of the implementation of Nigeria’s new tax regime under the Nigeria Revenue Service (Establishment) Act, 2025, enacted by President Bola Tinubu in June same year.

However, the reform of a new CGT regime under the Nigeria Tax Act 2025 have significantly modernized and expands how CGT works in Nigeria. Under the new regime, CGT ensures that investors who profit from rising share prices contribute to public revenue.

The new CGT regime becomes effective January 1, 2026, as part of the 2025 Finance and Tax Reform Act implementation plan. When itbecame effective, CGT becomes progressive, meaning it is tied to your income tax band. Rates range from 0% up to 30% depending on your income (or gain) level.

This aligns CGT more closely with personal income tax principles. For companies and corporate organizations, the tax now aligned with the current corporate tax rate, which is typically 30%. For foreign Investors, CGT on gains from Nigerian assets, especially from local equities, may be as high as 30% unless exemptions apply.

CGT can apply to:

• Individuals, including residents and non-residents, on gains from disposing of Nigerian-situated assets.
• Companies and entities, on gains from asset disposals.
• Non-resident persons who dispose of assets situated in Nigeria.

CGT also applies to all Nigerian exchanges registered with the Securities and Exchange Commission (SEC), including the Nigerian Exchange (NGX) and FMDQ. Off-market or private share disposals are also covered.

However, the 2025 CGT framework introduces some exemptions and reliefs:

• Small investors such as individuals whose total proceeds in a 12-month period do not exceed ₦150 million and whose gains are below ₦10 million may be exempt from CGT.
• Institutional investors such as pension funds, REITs (Real Estate Investment Trusts), ans NGOs are typically exempt from the tax law.
• Certain personal assets like cars, furniture, household goods used personally are also not chargeable.
• If you reinvest sale proceeds into Nigerian companies within a specified period (often 12 months), the gains may be fully exempt.
• Grandfathering of old gains: These are gains earned before 2026 (before the reform takes effect). These gains are not taxed retroactively. The cost base for existing investments is reset, so only gains after 2026 are taxed.

How CGT Is Calculated

To calculate your gain, the Gain will be equal to the sale proceeds, and minis the cost base. That is, Net Capital Gain = Sale proceeds − Cost base (original cost or market value depending on rules). Then apply the relevant tax rate: companies pay 30% and individuals are taxed at personal income tax (PIT) rates (progressive, up to 25%).

Expenses like brokerage fees, professional commissions, transaction costs, interest on investment loans, and capital losses may be deductible before computing CGT. Use this tax calculator to calculate how much you would pay Nigeria in taxes.

It's also important to note that taxpayers must file a capital gains return and pay the tax within a specified period of disposal. Here's the penalty breakdown for individuals and companies that violate the tax law. However, some investors and analysts fear that higher CGT rates might prompt sell-offs or reduced investment if not managed with exemptions and reinvestment reliefs.