The announcement of the new 30 per cent capital gains tax (CGT) under the Nigerian Tax Act (2025) has sparked reactions in the Nigerian corporate landscape.
Under the new CGT guidelines, certain limitations have been introduced. For example, there is a limit of N150 million on the sale of shares in Nigerian companies. Simply put, if the total sales amount in a year is less than N150 million, and the total profit from the sale of assets is less than N10 million, the company is exempt.
While most analysts have focused on the impact of the new CGT on foreign portfolio investors in NGX, its impact goes beyond the stock market.
According to Section 34 of the Act, all types of property come under CGT. These include land, buildings, equipment, shares or company stock, stock options and rights, debt, digital or virtual assets (such as cryptocurrencies), and other intangible or non-physical assets, including intellectual property.
Also read: The truth, half truth of the new capital gains tax system
Even oil field properties are not exempt. In a report, Andersen, a tax and trade advisory firm in Nigeria, outlined the potential impacts of CGT on upstream oil deals.
The new tax regime, which will take effect from January 1, 2026, comes after almost a year of upstream asset transfers worth about $5 billion in Nigeria. Inevitably, if the new CGT had been in place at the time those deals were being negotiated, it would have had a significant impact on the deal size and could have disrupted some transactions.
In response to the announcement, investors are treating the news cautiously. Some people have questioned the rationale behind the new tax. Meanwhile, various advice on how to control the regime has begun to circulate.
Speaking on some possible consequences, Ayodeji Ebo, Chief Business Officer of Optimus by Afriinvest, said the tax means investors will now have to earn higher profits to sustain their returns.
“So, if someone makes more than N10 million profit, he has to pay 30 per cent. That is N3 million to the government, leaving a net profit of N7 million. Investors at this stage now have to make more profits to sustain their returns,” he explained.
Speaking to BusinessDay TV, Abo said companies have to be smarter in their tax planning. He highlighted one strategy that companies could adopt under the new law: accounting for capital gains as profit.
Also read: Capital gains tax reform shields small investors, targets high earners
Accounting for capital gains as profit
According to the Nigeria Tax Act 2025, Company Income Tax (CIT) is set at 30 percent, which is the same rate as CGT. This means that profits earned from the sale of property, shares or other related investments can be included as part of the company's operating profit.
Earlier, with CGT at 10 per cent and CIT at 30 per cent, corporates were deliberate about separating capital gains from profits. Now, it is more likely that companies will include flows from asset sales in their profit and loss statements. In years when a company records a loss, it can avoid paying CGT altogether.
Selling underperforming assets
Ebo also suggested that investors could adopt more strategic portfolio management practices. Selling underperforming assets can be one way to reduce tax liability.
He explained: “For example, if I review my portfolio within a year and realize I have reached the N150 million threshold, and will therefore owe CGT, I can sell some loss-making or underperforming shares. The loss from those sales will offset gains on other assets, effectively reducing my overall taxable profit.”
He highlighted additional incentives for reinvestment. Under the existing provisions, gains reinvested in other eligible securities within the same period are exempt from CGT. This allows investors to legally defer or avoid tax payments on those reinvested amounts.
Another possible strategy is for investors to retreat from the equity market altogether, Ebo said. The calculations are even more complex for foreign investors, many of whom face the risk of double taxation.
“An investor who makes $1 million in capital gains from Nigerian shares could lose about $300,000 from the proposed 30 percent CGT. If that investor would have to pay tax on the same income in his home country, the effective return is further reduced,” he said.
In such a situation, the incentive to remain in the market becomes weak. “Even with a 20 percent return on equity, a 30 percent tax reduces net returns to about 14 percent,” Ebo said. Fixed income instruments yielding between 14 to 15 per cent and with very low volatility become comparatively more attractive.
Also read: New capital gains tax regime: Here's how it impacts you
serial transaction
Away from capital markets, Anderson highlighted strategies for upstream players. One approach is staggering transactions. Instead of disposing of assets in a single sale, companies may break the sale into smaller tranches or structure deals with earn-out mechanisms.
Streamlined arrangements not only reduce the financing burden for buyers but also spread the benefits. This reduces the immediate cash flow from the tax increase.
Anderson also suggested that companies weigh the merits of a share sale versus an asset sale. Instead of acquiring the assets, companies may choose to acquire the company itself. This approach was used in the acquisition of Mobil Producing Unit Nigeria (MPNU) by Seplat and the acquisition of Shell Petroleum Development Company (SPDC) by Renaissance.
In the case of share sales, Anderson said the location of the seller has become an important consideration. Companies may explore offshore holding structures to facilitate disposal. This allows them to take advantage of jurisdictions with favorable double taxation agreements (DTAs), limit Nigeria's tax entitlements and, in some cases, reduce or even eliminate CGT exposure.
