November 09, (THEWILL) — Nigeria’s sweeping overhaul of its capital gains tax (CGT) regime has redrawn the map for investors, oil giants, and private equity funds eyeing exits in Africa’s biggest economy.
The new law, part of the Nigeria Tax Act 2025 (NTA 2025), replaces the long-standing flat CGT rate with progressive and corporate-aligned rates — a move designed to plug revenue leakages, close loopholes in offshore deals, and bring large asset disposals into the national tax net.
From 10% to 30%: Tax Reality
Until now, Nigeria’s CGT framework levied a flat 10% tax on gains from the disposal of chargeable assets from shares and land to goodwill and investment property.
That low rate, unchanged for decades, allowed many large investors, particularly in oil, gas, and private equity to exit Nigerian assets at minimal tax cost.
Under the Nigeria Tax Act 2025, which takes effect in January 2026, this has changed dramatically:
Corporate entities will now pay CGT aligned with the Corporate Income Tax rate, up to 30% on realized gains.
Individuals will no longer pay a flat rate; instead, gains will be taxed under the progressive personal income tax (PIT) structure, rising to around 25% for top-band taxpayers.
Thresholds and exemptions protect smaller investors: those with sale proceeds below ₦150 million and gains under ₦10 million in a 12-month period are exempt.
The asset base has widened, now including land, shares, goodwill, digital and virtual assets, and crucially, indirect offshore transfers of Nigerian interests.
A reinvestment relief provision allows taxpayers who reinvest sale proceeds into Nigerian companies to defer or avoid CGT.
According to EY Nigeria’s Tax News (2025), the reform “broadens the tax base significantly, eliminates artificial structuring through offshore holdings, and aligns Nigeria with global capital taxation norms.”
Why This Matters:
In simple terms: the government wants to tax wealth where it’s created. Companies and investors can no longer transfer ownership of Nigerian assets through offshore entities and escape tax. For smaller investors, exemptions mean business continues as usual. But for corporations and high-value investors, particularly in oil, gas, and private equity, the new law alters the calculus of doing business in Nigeria.
Impact Across Key Sectors:
Oil and Gas: Exit Deals Face New Tax Weight
Nigeria’s oil and gas sector has witnessed a wave of asset divestments by international oil companies (IOCs) including Shell, ExxonMobil, and TotalEnergies as they shift to cleaner energy portfolios. Under the new CGT regime, any gain from these disposals will now attract tax at up to 30%, a sharp rise from the old 10% rate.
The Tax Appeal Tribunal has already ruled that capital gains tax applies to the sale or assignment of interests in oil fields, even before production starts effectively confirming the government’s right to tax upstream exits.
For the government, the benefit is clear: It can capture billions of naira in previously untaxed capital gains from multi-billion-dollar asset transfers. For oil companies and private investors, however, the adjustment means thinner margins and more careful structuring of future deals.
The inclusion of indirect transfers ensures that gains from offshore holding company sales a common strategy for divesting Nigerian oil interests will now fall under the domestic CGT net.”
Private Equity and Share Disposals
Private equity (PE) funds and venture investors, key players in Nigeria’s growing tech and infrastructure markets will also feel the heat.
Previously, PE firms could sell stakes in portfolio companies with just a 10% tax on gains. Now, their exits will face up to 30% taxation for corporates.
According to Pavestones Legal, while smaller deals below the ₦150 million threshold remain shielded, most PE transactions exceed that amount, meaning larger players will bear the brunt.
However, the reinvestment relief could soften the blow: firms that reinvest proceeds into other Nigerian businesses or securities may qualify for deferral or exemption.
Still, not all market watchers are optimistic. The CEO of 11 PLC, in a media interview, warned that “a 30% CGT on share disposals could discourage investors and trigger capital flight.” For the government, though, the move promises a steady new revenue stream from the high-value private capital ecosystem, where large profits often escaped taxation.
Boosting Government Revenue and Fiscal Sustainability
Nigeria’s tax-to-GDP ratio, at just about 10.8%, remains one of the lowest in Africa far behind South Africa (26%) and Kenya (18%).
By widening the CGT net, the federal government hopes to raise non-oil revenues and reduce dependence on volatile oil exports.
Fiscal policy experts say this reform signals a philosophical shift: taxing wealth creation at the point of value realization, rather than only taxing income or consumption.
According to Baker Tilly’s 2025 Tax Reform Brief, the CGT overhaul “is expected to generate substantial additional revenue from high-value asset disposals, while leaving small investors largely untouched.”
If effectively enforced, the law could boost Nigeria’s annual tax receipts by ₦1–₦1.5 trillion in its first two years, estimates from the Federal Inland Revenue Service (FIRS) suggest.
Winners and Losers of Reform
Winners:
The government, gaining a new and sustainable revenue stream.
Long-term investors, who benefit from reinvestment incentives and better market stability.
Smaller investors, shielded by generous thresholds and exemptions.
Losers:
Oil majors and PE firms seeking quick exits, now facing heavier tax burdens.
Foreign portfolio investors, who may rethink exposure to Nigerian equities due to reduced after-tax returns.
Short-term speculators, whose rapid flips are now less profitable.
Tax reform expert Taiwo Oyedele argues that while higher taxes are never popular, the change could ultimately “boost investor confidence if revenues are transparently used and predictably administered.”
Conversely, some market players fear that Nigeria’s attractiveness may wane compared to neighboring Ghana or Egypt, where capital gains on long-term holdings remain lower.
The Federal Inland Revenue Service is expected to issue guidelines on computation, reporting, and reinvestment relief before January 2026, when the new CGT framework takes full effect.
It is recommended that businesses and investors:
- Reassess valuations to factor in CGT costs;
- Keep detailed records of acquisition costs and improvements;
- Consider timing exits or reinvestments strategically to qualify for reliefs.
Nigeria’s new capital gains regime marks one of the boldest fiscal policy shifts in recent years, one that targets large-scale capital transactions rather than everyday consumption.
For the government, it’s a vital tool to shore up revenue and close offshore loopholes. For investors, it’s a wake-up call: the era of low-tax exits in Nigeria is over.
Ogochukwu Onwaeze
