1) What is capital gains tax (CGT) on equities in Nigeria?

Capital Gains Tax (CGT) is a tax charged on profits (gains) realized from the disposal or sale of shares or other equity instruments. Under the new regime, CGT ensures that investors who profit from rising share prices contribute to public revenue.

2) Which instruments and transactions are within the scope of CGT for equities?

CGT applies to:

• Listed and unlisted shares, stocks, and equity securities.
• Indirect share transfers (selling shares in a foreign company that owns Nigerian assets).
• Digital and private equity transactions.
• Mergers and acquisitions where shares are exchanged or disposed.

3) How does CGT on stock differ from other taxes on equity (e.g., stamp duty, corporate tax on dividends)?

• Stamp duty applies to documentation of share transfers, not profits.
• Corporate tax on dividends applies to company earnings distributed to shareholders.
• CGT, by contrast, applies only when shares are sold for a profit i.e., the difference between sale price and purchase price.

4) When will the capital gains tax on equity take effect in Nigeria?

The new CGT regime becomes effective January 1, 2026, as part of the 2025 Finance and Tax Reform Act implementation plan.

5) Does the CGT on equities apply to all Nigerian stock exchanges or only certain markets?

It 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.

6) Will the CGT apply to both resident and non-resident investors?

Yes.

• Resident investors pay CGT on worldwide equity gains.
• Non-resident investors are taxed only on Nigerian-sourced gains (e.g.,
• shares in Nigerian companies).
• Tax treaties may reduce or eliminate double taxation.

7) Will the CGT change the economics of primary vs. secondary offerings for new investors?

Possibly.

• Primary offerings (IPO or new share issuance): no CGT since no prior ownership or “gain.”
• Secondary market trades (selling existing shares): CGT applies if the sale yields a gain.

Thus, CGT may make long-term holding slightly less profitable than before.

8) Will there be any relief or exemptions for long-term holders or frequent traders?

Yes.

• Gains below ₦10 million in a 12-month period are exempt.
• Transactions totalling ₦150 million or less in proceeds per year are also relieved from CGT.
• No special long-term holding relief yet, but reinvestment relief is under consideration.

9) How are capital gains tax on equity computed under the 2026 regime?

Formula:

Net Capital Gain= (Sale Price−Allowable Expenses) −Cost of Acquisition

Then apply the relevant tax rate:

• Companies: 30%
• Individuals: Taxed at personal income tax (PIT) rates (progressive, up to 25%).

10) How is the base cost (purchase price) determined for shares acquired through corporate actions (splits, mergers, stock bonuses)?

• For splits: cost is proportionally adjusted across the new shares.
• For mergers or stock swaps: cost is based on the original value of shares exchanged.
• For bonus issues: base cost remains that of the original shares (bonus shares have zero acquisition cost).

11) Are there rules about reinvestment of proceeds and any CGT deferral options?

Yes.

Proposed reinvestment relief allows investors to defer CGT if the proceeds are reinvested in Nigerian equities or qualifying assets within a set timeframe (likely 12 months).

Details await FIRS (Federal Inland Revenue Service) implementation guidelines.

12) How does CGT on capital gains interact with taxation on dividends?

They are separate.

• Dividends: taxed as income when distributed.
• Capital gains: taxed only on realized profits from asset disposal.

No double taxation since they apply to distinct events.

13) Do tax credits or foreign tax credits apply to CGT on Nigerian equities?

Yes. Under double taxation treaties (DTTs), investors can claim foreign tax credits for taxes paid abroad on the same gain, where applicable. Resident individuals can also offset foreign CGT against Nigerian CGT on the same transaction.

14) How are institutional investors treated under the CGT regime?

Institutional investors (pension funds, insurance companies, mutual funds) are treated as companies and taxed at the corporate CGT rate (30%), except where exemptions apply (e.g., pension fund investment income exemptions).

15) What documentation is required to compute and report capital gains on stock transactions?

• Trade contract notes from brokers
• Proof of purchase and sale (date, price, quantity)
• Bank and brokerage statements
• Corporate action records (e.g., splits, dividends, mergers)
• Valuation reports (if applicable)

16) Will there be withholding at source on capital gains for non-residents or certain categories of investors?

Likely yes.

The FIRS may require brokers or registrars to withhold CGT at source for non[1]residents and remit it directly to the tax authority, similar to existing rules for withholding taxes on dividends.

17) How does Nigeria’s CGT on equities compare with capital gains regimes in neighbouring countries?

Ghana	Kenya	Nigeria	South Africa
Headline corporate capital gains tax rate
Capital gains are included as part of income and taxed at the applicable corporate income tax rate.	15%	Old: 10% New (from Jan 2026): 30%	21.6%
Headline individual capital gains tax rate
Capital gains are included as part of income and taxed at the individual’s marginal/graduated tax rate for residents (highest of 35%) and 25% for nonresidents; or 25% (upon election and the gains are as a result of the realisation of investment assets)	15%	Old: 10% New (from Jan 2026): Taxed at personal income tax rate—progressive, up to 25%	18%

18) What potential exemptions or thresholds exist to protect small-scale investors?

• Exemption if gains ≤ ₦10 million in 12 months.
• No CGT if total sale proceeds ≤ ₦150 million in 12 months.
• Small investors and SMEs therefore face minimal or no CGT.

19) How would stock splits or stock dividends affect the cost basis and capital gains calculation?

• Stock splits: reduce the per-share cost proportionally (no gain recognized).
• Stock dividends: not immediately taxable; cost basis of the original shares is spread over all shares held post-dividend.

20) For a long-term holder with a holding period beyond a defined threshold, does the CGT rate change?

No. Currently, no time-based discount exists in Nigeria’s CGT law.

However, policymakers have discussed potential reduced rates for long-term

investments to encourage market stability. This may appear in future amendments