November 10, (THEWILL) — Nigeria’s planned overhaul of the capital gains tax regime is prompting investors to reassess their portfolios, with a noticeable increase in asset sales as market players move to avoid higher tax liabilities.
Under reforms proposed by the Federal Inland Revenue Service, the capital gains tax rate is set to rise from the current flat 10 percent to as much as 30 percent for certain transactions from January 1, 2026.
The scope of taxable transactions is also expanding to include indirect transfers of shares and digital assets. However, some exemptions will apply, such as for individuals whose asset sale proceeds fall below ₦150 million and gains under ₦10 million.
Market sources say portfolio managers and high-net-worth individuals have begun selling assets ahead of the effective date to lock in the lower 10-percent rate and reset cost bases.
The concern is that a higher tax burden will shrink after-tax returns, particularly in sectors with frequent high-value transactions such as real estate, private equity, and listed equities.
FIRS officials say the reform aims to broaden Nigeria’s tax base, capture taxable value in the digital economy, and close loopholes used to avoid tax on cross-border transactions.
However, analysts warn that the steep increase in capital gains tax at a time of intense competition for global investment could deter inflows, reduce market liquidity, and weaken investor confidence.
In the equities market, the anticipated tax adjustment may encourage early sell-offs, potentially creating short-term downward pressure on prices as investors bring exits forward.
The broadened tax net for offshore holdings also increases the effective cost of investing in Nigeria compared to other markets.
Private equity and real estate, where gains are often realised through large exit events, could see slower deal activity as investors reconsider timing and valuation assumptions.
If fully implemented and enforced, the revised capital gains tax framework could boost government revenue over the medium term.
But its success depends largely on whether the policy can raise revenue without triggering capital flight or eroding the investment environment.
Ogochukwu Onwaeze
