New Capital Gains Tax to Boost Market Competitiveness and Investor Confidence
The new Capital Gains Tax (CGT) in Nigeria is expected to make the capital market more competitive and investor-friendly, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee. He spoke during a virtual public lecture organised by the Capital Market Academics of Nigeria (CMAN).
Key Highlights:
• Low Relative Tax: CGT remains one of the lowest taxes compared to Companies Income Tax (CIT) and Value Added Tax (VAT).
• From 2014–2024, CGT revenue was ₦276 billion, far lower than CIT (₦26 trillion) and VAT (₦22 trillion).
• Profitability Boost: Combined with CIT reduction from 30% → 25%, companies are expected to enjoy higher valuations that exceed incremental CGT costs.
Benefits for Investors & Businesses:
• Exemptions & Deductions:
• Retail investors, pension funds, REITs, security lending, re-investment, and corporate reorganisations are exempted from CGT.
• Capital losses and incidental costs are deductible.
• Tax Harmonisation:
• Elimination of Withholding Tax on bonus shares, stamp duty exemptions on share transfers.
• Alignment of various levies such as TET, NITDA, and NASENI.
• Lower Costs & Better Cash Flow: Input VAT credits on assets and overheads will reduce business costs.
Expert Opinions:
• Dr. Umaru Kwairanga (NGX Chairman): CGT is not new and perception matters in financial markets; managing information is crucial to avoid market volatility.
• Innocent Ohagwu (CITN President): CGT will benefit the market, not harm it, urging stakeholders to give the reform a chance.
• Prof. Sheriffdeen Tella: Tax on private bonds may encourage investors to shift to government bonds.
• Muhammad Nami (Former FIRS Chairman): Advocates for stakeholder engagement and translating policy in local languages for better understanding.
Bottom Line:
The new CGT reform is designed to enhance market competitiveness, attract more investment, and simplify tax processes, all while protecting the interests of retail investors and fostering a healthy investment environment in Nigeria.
The new Capital Gains Tax (CGT) in Nigeria is expected to make the capital market more competitive and investor-friendly, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee. He spoke during a virtual public lecture organised by the Capital Market Academics of Nigeria (CMAN).
Key Highlights:
• Low Relative Tax: CGT remains one of the lowest taxes compared to Companies Income Tax (CIT) and Value Added Tax (VAT).
• From 2014–2024, CGT revenue was ₦276 billion, far lower than CIT (₦26 trillion) and VAT (₦22 trillion).
• Profitability Boost: Combined with CIT reduction from 30% → 25%, companies are expected to enjoy higher valuations that exceed incremental CGT costs.
Benefits for Investors & Businesses:
• Exemptions & Deductions:
• Retail investors, pension funds, REITs, security lending, re-investment, and corporate reorganisations are exempted from CGT.
• Capital losses and incidental costs are deductible.
• Tax Harmonisation:
• Elimination of Withholding Tax on bonus shares, stamp duty exemptions on share transfers.
• Alignment of various levies such as TET, NITDA, and NASENI.
• Lower Costs & Better Cash Flow: Input VAT credits on assets and overheads will reduce business costs.
Expert Opinions:
• Dr. Umaru Kwairanga (NGX Chairman): CGT is not new and perception matters in financial markets; managing information is crucial to avoid market volatility.
• Innocent Ohagwu (CITN President): CGT will benefit the market, not harm it, urging stakeholders to give the reform a chance.
• Prof. Sheriffdeen Tella: Tax on private bonds may encourage investors to shift to government bonds.
• Muhammad Nami (Former FIRS Chairman): Advocates for stakeholder engagement and translating policy in local languages for better understanding.
Bottom Line:
The new CGT reform is designed to enhance market competitiveness, attract more investment, and simplify tax processes, all while protecting the interests of retail investors and fostering a healthy investment environment in Nigeria.