Economists have warned that raising Nigeria’s Capital Gains Tax from 10 to 30 percent could hurt investor confidence.
They say the move may reduce market participation and slow foreign investment inflows.
Economists have expressed concern that the Federal Government’s plan to raise Capital Gains Tax (CGT) from 10 to 30 percent could discourage foreign investors and slow down activities in Nigeria’s capital market.
The new tax policy, which is expected to take effect from January 1, 2026, is part of the government’s broader effort to reform the tax system through the Nigeria Tax Act, the Nigeria Tax Administration Act, and the Nigeria Revenue Service Act. These laws aim to expand the tax base, simplify collection, and boost government revenue.
Under the new law, companies will now pay 30 percent on capital gains, the same rate as the Companies Income Tax, while individuals will be taxed progressively based on their income bracket.
Speaking to journalists on Monday, Charles Sanni, Chief Executive of Cowry Treasurers Limited, said the decision could make the Nigerian market less appealing compared to other developing economies.
“A higher capital gains tax reduces the amount investors take home from their profits,” Sanni said. “That automatically affects returns, discourages participation, and can make the market less attractive to both local and foreign players.”
He explained that even though Nigeria’s economic indicators were beginning to improve, the tax increase might lead to a decline in market participation, particularly in the equities segment.
“We could see investors withdrawing or reducing their stakes in the stock market. Once Nigeria makes such a move, other African countries might follow, and that could limit regional competitiveness,” he warned.
Sanni also noted that the policy could have wider effects on the economy, reducing demand for Nigerian stocks and tightening access to capital for listed firms.
“The immediate consequence will likely be a drop in investor appetite, especially among foreigners. This could weaken our foreign reserves, lower capital inflows, and raise borrowing costs for businesses,” he said.
However, he acknowledged that the government’s decision was largely driven by the need to boost revenue collection, especially amid rising fiscal pressures.
“It’s not a company income tax; it’s a capital gains tax. The government is just looking for more revenue. If managed properly, it could work, but misuse of the funds would only worsen the investment climate,” he added.
A former Director at the Central Bank of Nigeria, Prof. Akpan Ekpo, also described the rate as “quite high,” but noted that the intent to raise revenue from wealthier individuals and big investors was understandable.
“To be honest, 30 percent is on the high side and may discourage some foreign investors,” Ekpo said. “But the idea is to get more revenue from those who can afford to pay.”
Ekpo estimated that the policy could generate up to ₦1 trillion annually if well implemented, though he stressed that its success would depend on proper management and transparency.
“It’s good that the government is thinking boldly about revenue generation, but the key is how that money is used. If channeled into health, education, and housing, it can have a positive long-term impact,” he stated.
He added that the move to widen the tax base was consistent with global trends toward progressive taxation, ensuring that wealthier individuals contribute more to national development.
“Middle-income earners and small investors are not the main targets here. The focus is on high-net-worth individuals and big corporations. What matters most is ensuring that the revenue is used to improve the lives of Nigerians,” he concluded.
