Nigerian investors get full CGT relief on reinvested shares

Taiwo Oyedele, chairman of the Presidential Tax Reform Committee

… Historical gains are protected

Investors in Nigerian equities will not be subject to capital gains tax (CGT) on any share gains accumulated before December 31, 2025.

Additionally, those who reinvest sale proceeds into Nigerian companies within 12 months will also be fully exempt from the tax.

By resetting the cost base of existing shareholdings and granting a reinvestment window, the government aims to prevent panic, protect investors, and keep capital circulating within the market rather than exiting at the first sign of fluctuations.

The reform ensures fairness by resetting the cost base to the December 31, 2025, closing price to prevent taxation on historical gains.

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Furthermore, it provides that reinvesting sale proceeds into Nigerian companies offers investors a full tax exemption, James Oni, director and head of taxation and regulatory advisory at TAC Tax Advisory Services, said in a webinar hosted by CSL brokers titled “Capital Gains Tax and its impact on the Nigerian Investor.”

Section 34(1)(a)(iii) of the Nigeria Tax Act, 2025, explains that gains from selling shares in Nigerian companies are exempt from capital gains tax if proceeds are reinvested within the same year.

The law also exempts smaller transactions; disposals under N150 million with gains below N10 million, as well as approved securities-lending transfers.

While not explicitly in Section 34, Taiwo Oyedele confirmed on LinkedIn that the cost base of existing investments will be reset to the higher of the actual acquisition cost or the closing market price as of December 31, 2025. Together, these measures protect historic gains and encourage long-term investment.

“For example, you want to rebalance your portfolio, you sell some stocks in February or March or April, and then you come back to the market at the end of that year. That whole gain that you have made is exempted from capital income tax,” Oyedele told stakeholders, summarising the reinvestment relief mechanism and its intent to permit productive portfolio reallocation without tax penalty.

Transition arrangements ensure that gains earned on shares up to 31 December 2025 will be grandfathered, taxed only upon disposal based on the law as it stood at that date.

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The CGT rate itself has not been increased; instead, capital gains are now integrated into personal and corporate income tax. This makes the system progressive, ensuring low-income earners pay little or no CGT while higher-income investors contribute a fairer share.

Data shows the reforms are not primarily about revenue. The equity market lost nearly N4.6 trillion during the panic preceding these clarifications, while CGT collections remain minimal.

The FIRS reportedly collected N52 billion from CGT in 2024, compared with N26 trillion from Companies Income Tax and N22 trillion from VAT between 2014 and 2024, while total CGT over the period amounted to only N276 billion.

According to the committee, the changes aim to harmonise the system, promote fairness, and deepen the market rather than significantly increase government revenue.

The reform benefits investors in multiple ways: CGT now applies only to net gains, and capital losses can be offset. Reinvested proceeds beyond the threshold are fully exempt, and institutional investors such as pension funds, REITs, and companies undergoing mergers or restructurings are also shielded.

Taiwo Oyedele described the measures as carefully targeted, aligning with international norms for investor protection and market fairness.

Read also: Private Equity firms see Nigeria risking capital inflows on 30% Capital Gains Tax

The 12-month reinvestment window is intended to discourage destructive exits by institutional players, converting potential panic selling into productive portfolio reallocation.

Together with the reset of pre-2026 cost bases, these measures form a deliberate policy package to protect historical gains, encourage liquidity, and reduce panic-induced capital flight.

By combining reinvestment relief, grandfathering of pre-2026 gains, progressive rates, and targeted exemptions, the reforms reduce investment risk, protect small and institutional investors, and harmonise tax administration.

The aim is to strengthen confidence in Nigerian equities while promoting long-term investment and a fair, predictable tax environment.

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