James Emejo in Abuja

The Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has clarified that the proposed introduction of a 30 per cent tax rate on capital gains from the disposal of shares would not deter foreign investors or  erode the country’s competitiveness.

Addressing investor concerns, he explained that many developed countries, including the United States, United Kingdom, and South Africa, apply CGT and still remained attractive investment destinations.

He said, “Competitiveness depends on overall returns and risk factors — not the absence of CGT.”

Oyedele also clarified that Nigeria was not tripling CGT for foreign investors, stressing that both local and foreign investors benefit from exemptions based on thresholds and reinvestment. 

He said, “Tax applies only where those thresholds are exceeded without reinvestment. Labelling this as a punitive tax on foreign investors is misleading.”

He pointed out that investors in Nigeria’s capital market have earned over 100 per cent average returns in dollar terms since May 2023, through capital gains, dividends, and currency appreciation.

He added that the ongoing tax reform aims to promote fairness, progressivity, and broaden participation in the capital market. 

He said, “This is an opportunity to attract more investments, especially by retail investors, away from gambling and virtual asset trading.”

In his presentation on impact of CGT on the capital market, he said CGT on Shares lower business risk, increase harmonisation and progressivity.

He said the policy objectives were to reduce burden of tax on business entry or startup especially input VAT on assets. 

This, he said, would also lower cost and enhance operating cash flows particularly lower CIT rate, and no minimum tax on capital.

He said the policy will harmonise with income tax to make CGT progressive similar to the practice in many countries 

This, he further noted, would curb arbitrage loophole by local investors and BEPS by foreign investors.

According to him, the current regime has flat CGT rate of 10 per cent while gains are isolated and taxed, adding that capital losses are not relieved for tax purposes.

He explained that in the new regime, businesses are taxed based on payer’s income band and rate like US, UK, Australia, SA, Ghana, Brazil, among others, as well as taxed on a net of gains and losses.

He said small companies pay zero per cent and individuals  with less than N150 million proceed and  N10 million gains exempted. 

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