Nigeria’s 2025 Capital Gains Tax Reform: Progress, Pitfalls, and the Road Ahead -By Ayoola Ogunbiyi, PhD

In June 2025, Nigeria enacted a sweeping tax reform through the Nigeria Tax Act (NTA), 2025, and its companion legislation. Among the most consequential changes is the overhaul of the Capital Gains Tax (CGT) regime, which takes effect from January 1, 2026. These reforms aim to align Nigeria’s tax system with global standards, broaden the tax base, and plug long-standing loopholes. However, while the reforms mark a significant step forward, they also expose critical implementation challenges that could undermine their effectiveness.

Aligning Capital Gains Tax with Company Income Tax: A Strategic Move

One of the most notable changes is the increase in the CGT rate for companies from 10% to 30%, aligning it with the Companies Income Tax (CIT) rate. This alignment eliminates a long-standing arbitrage opportunity where companies could reclassify trading income as capital gains to benefit from the lower CGT rate. By closing this loophole, the government aims to ensure tax neutrality between capital and trading income, thereby promoting fairness and reducing tax avoidance.

However, the reform missed a critical opportunity to address the capital gains rollover relief loophole. Under current rules, companies can defer CGT indefinitely by reinvesting proceeds from asset disposals into similar assets. This “perpetual rollover” mechanism allows companies to avoid realizing taxable gains, effectively eroding the tax base. A more robust reform would have introduced a cap on the number of times or duration for which rollovers can be claimed, as seen in other jurisdictions. Without such a cap, companies can continue to defer tax liabilities indefinitely, undermining the revenue-generating potential of the CGT regime.

Capital Gains Taxation for Individuals: A Complex Implementation Challenge

For individuals, the reform introduces a progressive CGT regime. Rather than a flat 10% rate, capital gains will now be taxed at the individual’s applicable personal income tax (PIT) rate, which ranges from 7% to 25% depending on income brackets. This change is intended to enhance equity by ensuring that higher earners pay more, while lower-income individuals benefit from lower rates or exemptions.

However, the success of this reform hinges on the effectiveness of Nigeria’s self-assessment and declaration mechanisms, particularly at the state level. Currently, most State Internal Revenue Services (SIRS) lack the infrastructure and enforcement capacity to ensure widespread compliance. Without a robust and user-friendly self-declaration system, the risk of underreporting or non-compliance remains high.

Moreover, Nigeria’s tax refund system is virtually non-existent. If tax authorities default to applying the highest PIT rate (25%) on capital gains in the absence of verified income data, taxpayers in lower brackets may be overtaxed without a clear path to claim refunds. This could discourage voluntary compliance and erode trust in the system. For the reform to be effective, the government must invest in digital infrastructure, taxpayer education, and a transparent refund process that incentivizes honest reporting.

The Role of Stockbrokers: A New Frontier in Tax Collection

The reforms implicitly place a significant compliance burden on stockbroking firms, which are expected to track capital gains on client accounts, report them to the relevant SIRS, and possibly act as tax collection agents. This raises several operational and legal questions:

• How will brokers determine the correct PIT rate for each client, especially in the absence of real-time access to their full income data?
• Will brokers be required to withhold CGT at source, and if so, at what rate?
• If the highest PIT rate is applied by default, how will taxpayers claim refunds or credits?

These questions remain unanswered, and with the January 2026 implementation date looming, the Nigeria Revenue Service (NRS) must urgently issue detailed guidelines and engage stakeholders to clarify roles and responsibilities. Additionally, there is a need for a centralized digital reporting system that links brokerage firms with tax authorities and individual taxpayer profiles to ensure seamless compliance.

Digital Assets Enter the Tax Net: A Bold but Challenging Step

In a landmark move, the NTA 2025 explicitly brings digital assets, including cryptocurrencies, NFTs, and utility tokens, under the CGT regime. Profits from the sale, exchange, or use of digital assets will now attract a 15% CGT for individuals, while companies will pay 30%.

While this aligns Nigeria with global trends, implementation challenges abound. The anonymity and decentralization of digital assets make it difficult for tax authorities to track transactions and enforce compliance. Moreover, the lack of a comprehensive regulatory framework for digital assets further complicates enforcement. Without clear asset classification, valuation standards, and reporting obligations, the risk of non-compliance remains high. The government must collaborate with fintech platforms and international exchanges to develop a traceable and enforceable tax framework for digital assets.

Netting of Capital Losses: A Welcome Development

On a positive note, the reform introduces the ability to offset capital losses against gains on similar assets, a long-overdue measure that aligns with international best practices. This change ensures that taxpayers are only taxed on net economic gains, promoting fairness and encouraging investment in volatile asset classes like equities and digital assets. It also provides relief to investors during market downturns, making the tax system more responsive to economic realities.

Conclusion: Reform with Reservations

Nigeria’s 2025 CGT reform is a commendable step toward a more equitable and efficient tax system. Aligning CGT with CIT, introducing progressive rates for individuals, and taxing digital assets are all forward-looking measures. However, the lack of clarity on implementation, especially regarding self-assessment, tax refunds, and the role of intermediaries like stockbrokers, could hinder the reform’s success.

To ensure the reform achieves its intended objectives, the NRS and SIRS must:

• Develop and deploy robust self-declaration platforms.
• Establish a transparent and efficient tax refund mechanism.
• Issue clear guidelines for brokers and digital asset platforms.
• Consider capping rollover reliefs to prevent indefinite deferrals.
• Build a centralized digital infrastructure to support real-time tax reporting and compliance.

As the January 2026 deadline approaches, the clock is ticking. The next few months will be critical in determining whether this reform becomes a milestone or a missed opportunity.

Ayoola Ogunbiyi PhD., FCA, ACCA, ACIB, ACTI

Dr. Ayoola Ogunbiyi is a seasoned tax policy expert and chartered accountant with over two decades of experience in fiscal policy advisory, corporate taxation, and international financial reporting. He holds fellowships with both the Institute of Chartered Accountants of Nigeria (ICAN) and the Association of Chartered Certified Accountants (ACCA), and is a respected voice in Nigeria’s tax reform discourse.