A deal involving the sale of a foreign company, whether in London, Dubai, Amsterdam, Johannesburg or any other jurisdiction, can now create tax consequences in Nigeria, even where the transaction does not involve a direct transfer of Nigerian shares. Following the commencement of the Nigeria Tax Act on 1 January 2026, Nigeria’s Capital Gains Tax regime has entered a new phase. The new regime introduces higher tax rates, broader taxing rights, and rules on indirect transfers that significantly reshape the tax landscape for investors and businesses.
Evolution of Capital Gains Tax (CGT) in Nigeria
CGT was introduced in Nigeria in 1967 at a flat rate of 20%, later reduced to 10% under the Investments and Securities Decree and subsequently consolidated into the CGT Act.
Under previous versions of the CGT Act, gains from the disposal of shares were totally exempt. The lower CGT rate compared to the income tax rate and the total exemption for disposal of shares incentivised entrepreneurs and investors.
However, from 2022, gains from direct disposal of shares in Nigerian companies became subject to CGT at 10%, unless certain specific exemption criteria were met. Taxpayers were required to compute, pay, and file returns by 30 June or 31 December of the year of disposal.
Nigerian tax reforms
Nigeria's tax reforms introduced four landmark laws: the Nigeria Tax Act (“NTA”), the Nigeria Tax Administration Act (“NTAA”), the Nigeria Revenue Service Act, and the Joint Revenue Board (Establishment) Act. Together, these laws seek to modernise Nigeria's tax system and strengthen revenue mobilisation.
Under the NTA, significant changes have been made to the CGT regime. Most notably, the CGT rate for companies has increased from 10% to 30%, aligning it with the corporate income tax rate and supporting a more unified tax framework for the treatment of gains and income.
In addition, the NTA expressly brings indirect transfers of shares or interests in Nigerian companies and assets within the scope of CGT. Consequently, offshore transactions that result in a change in ownership of Nigerian companies or assets may now trigger CGT liabilities in Nigeria.
These reforms are intended to ensure that gains derived from Nigerian assets remain within Nigeria’s taxing jurisdiction, including where offshore holding structures are used.
Specifically, section 17(2) of the NTA provides that gains derived by a non-resident from the disposal of chargeable assets are taxable in Nigeria where:
- the asset is located in Nigeria; or
- the asset is deemed to be located in Nigeria.
Section 46(f) further provides that shares or comparable interests in foreign entities are deemed to be located in Nigeria where, at any time during the 365 days preceding their disposal, more than 50% of their value is derived, directly or indirectly, from Nigerian assets.
Section 47 of the NTA provides that gains accruing from the disposal of shares by a non-resident constitute chargeable gains where the disposal results in:
- a change in the ownership structure or group membership of any Nigerian company; or
- a change of ownership of, title in, or interest in any asset located in Nigeria.
Emerging issues and uncertainties under the new CGT regime
Although the reform has significantly expanded Nigeria's taxing rights, a number of technical and administrative uncertainties remain unresolved.
Conclusion
By aligning the taxation of chargeable gains more closely with the broader income tax framework and extending coverage to indirect transfers, Nigeria has modernised its CGT regime and significantly strengthened its ability to tax value derived from Nigerian assets.
As with any major tax reform, questions have emerged during the transition to the new regime. These issues, as highlighted in this article, may require further clarification through legislative amendments, regulations, or administrative guidance.
Such clarification would not only support consistent implementation of the law but also provide taxpayers with greater certainty as they navigate the new rules.
Navigate Nigeria's new capital gains tax regime
Nigeria's capital gains tax regime has undergone its most significant transformation in decades. As businesses and investors adapt to the new landscape, understanding the practical implications will be critical for effective planning, compliance and decision-making.
Download the full publication for insights into the opportunities, uncertainties and considerations arising from the reforms.
