The Federal Government has introduced a new capital gains tax regime for shares traded on the Nigerian stock market. The government says this will reduce business risks, strengthen investor confidence, and build a fairer tax system.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, explained the changes during a virtual market engagement with the Nigerian Exchange Group (NGX).
“Under the old regime, capital gains on shares were taxed at a flat rate of 10 per cent, with no relief for losses,” Oyedele said. “The new regime introduces progressive taxation, where gains are taxed according to income bands, just like in the U.S., U.K., South Africa, Ghana, and Brazil.”
Capital gains will now be taxed on a net gains-and-losses basis. Reinvestment relief will continue. However, exemptions will apply to small companies and individuals whose share proceeds are below ₦150 million, or gains not exceeding ₦10 million.
Other reliefs include exemptions for reorganisations and a low withholding tax on dividends. Oyedele said that beyond capital gains, the government is planning more reforms to attract investors.
Broader Tax Reforms in the Works
According to him, plans are underway to cut Companies Income Tax (CIT) from 30% to 25%. The government is also considering harmonising over 60 different taxes into less than 10, removing minimum tax on turnover, and raising the CGT exemption threshold on shares.
“We are also looking at exemptions for Real Estate Investment Trusts and securities lending, allowing VAT credits on assets, and introducing income tax exemptions on fixed income securities,” he added.
NGX Chairman, Dr Umaru Kwairanga, welcomed the move. He said the capital gains segment is vital for both individuals and institutions, stressing that stakeholders must fully understand the changes.
He said he felt confident that the new policy would boost market growth and attract global investors.
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