Could a tax actually make Nigeria’s capital market more competitive? It sounds counterintuitive, but that’s exactly what Taiwo Oyedele, chairman of the presidential fiscal policy and tax reforms committee, is arguing. In a recent virtual lecture hosted by the Capital Market Academics of Nigeria (CMAN), Oyedele made a bold claim: the new capital gains tax (CGT) will not only streamline the market but also make it more attractive to investors. But here’s where it gets controversial—while some fear this tax could burden investors, Oyedele insists it’s one of the lowest compared to corporate income tax (CIT) and value-added tax (VAT). Is he right, or is this just wishful thinking?
Oyedele backed his argument with data from the Federal Inland Revenue Service (FIRS), revealing that between 2014 and 2024, CIT raked in N26 trillion and VAT N22 trillion, while CGT contributed a mere N276 billion—less than 1% of the other two. He also pointed out that many developed and developing nations, including resource-rich countries, tax capital gains at the same rate as regular income. But does this global trend apply seamlessly to Nigeria’s unique economic landscape?
One of the most intriguing aspects of the reform is the reduction of CIT from 30% to 25%, which Oyedele believes will boost business profitability and, in turn, increase market valuations. But will this benefit trickle down to small investors, or will it primarily favor large corporations? Additionally, the introduction of input VAT credits on assets and overheads—previously excluded—is expected to slash operating costs and improve cash flow for businesses. Could this be the game-changer Nigerian businesses have been waiting for?
Oyedele also highlighted several exemptions under the new policy, including CGT waivers for retail investors, reinvestments, pension funds, real estate investment trusts (REITs), securities lending, and reorganizations. He emphasized that the policy will allow deductions for capital losses and incidental costs, eliminate withholding tax (WHT) on bonus shares, and create a level playing field between listed and unlisted entities. But here’s the part most people miss—will these exemptions truly benefit the average investor, or are they just a smokescreen for deeper issues?
Umaru Kwairanga, chairman of the Nigerian Exchange Group (NGX), acknowledged that CGT isn’t new to Nigeria’s capital market, but recent reforms have sparked fears of an increased tax burden. He stressed the importance of managing information carefully to avoid flawed perceptions that could destabilize markets. Is the fear of CGT justified, or is it simply a case of misinformation?
Innocent Ohagwu, president of the Chartered Institute of Taxation of Nigeria (CITN), countered these fears, arguing that CGT won’t harm the market but will instead drive profits. He urged stakeholders to give the policy time to prove its worth before jumping to conclusions. But how long is too long to wait for results, especially in a volatile market?
Meanwhile, Muhammad Nami, former chairman of FIRS, called for broader stakeholder engagement to address the challenges facing investment decisions in Nigeria. Is this a call for collaboration or a subtle critique of the current approach?
As the debate heats up, one thing is clear: the CGT reform is a double-edged sword. While it promises to enhance market competitiveness and investor-friendliness, it also raises questions about its real-world impact. Will it be a catalyst for growth or a stumbling block for investors? We want to hear from you—do you think the CGT will benefit Nigeria’s capital market, or is it a risky gamble?
