The Impact of Capital Gain Tax on Nigeria’s Financial Markets
The chairman of the Senate Committee on Capital Market and Institutions, Senator Osita Izunaso, has raised concerns about the Capital Gain Tax (CGT) triggering panic among investors. He called for a reevaluation of the Act, which is part of the new tax laws signed by President Bola Tinubu.
Izunaso made these remarks at the ‘Moneyline with Nancy Investment Forum 2025’ organized by broadcaster and financial analyst Nancy Nnaji. The forum, themed ‘Nigeria’s New Financial Landscape: Reforms, Risks, and the Road to Wealth Creation,’ took place during a time when Nigeria is implementing far-reaching economic reforms aimed at stabilizing the financial system and attracting investment.
Unprecedented Sell-Offs on the Nigerian Exchange
Daily Trust reports that the Nigerian exchange experienced unprecedented sell-offs in recent times. Panic-driven selloffs on Tuesday wiped out a staggering N4.61 trillion from the Nigerian Exchange as sell pressure intensified across sectoral indexes.
The Nigerian Exchange recorded its largest daily losses in decades, with investor sentiment plummeting following mixed third-quarter earnings performance by listed companies. The losses dragged key performance indicators downward sharply, as year-to-date return retreated to 37.31% as investors continued to pull out in successive trading sessions.
The Nigerian Exchange All-Share Index plummeted by 5.01% to 141,327.30 points, while market capitalisation declined sharply by N4.61 trillion to N89.88 trillion, reflecting intensified sell-side pressure. Market breadth was overwhelmingly negative, with 62 decliners dwarfing just 4 advancers, yielding a severely depressed 0.1x ratio.
Blaming the Capital Gain Tax
Izunaso expressed concern over a recent tax policy under the Nigerian Tax Act 2025, which increases Capital Gains Tax on share transactions worth N150m and above from 10 percent to 30 percent, effective January 2026.
He warned that “The announcement has already triggered panic sales among major investors, leading to an over N2tn loss in market capitalisation within a week.”
However, Izunaso explained that the Investment and Securities Act (ISA) 2025 represents a major milestone in Nigeria’s capital market architecture, providing clearer rules, stronger regulatory enforcement, and improved investor protection. The law, he added, signals a new era for market integrity and credibility.
“One of the landmark provisions of the ISA 2025 is the reinforcement of regulatory oversight,” he said, noting that the Act gives the Securities and Exchange Commission greater powers to detect systemic risks early and enforce compliance. This, he said, will help build trust among investors and ensure fair and transparent market operations.
He also highlighted strengthened investor protection under the new law, including stricter corporate governance standards, enhanced disclosure requirements, and easy access to redress mechanisms.
Izunaso appealed to the Minister of Finance to explore measures that will retain investor interest and avoid destabilising the market. A balanced approach, he said, is important to maintain the market’s current momentum.
“I would like to respectfully suggest that the Minister of Finance explore mechanisms to address this concern, ensuring that both domestic and foreign investors remain engaged and confident in the Nigerian market. A balanced approach here will sustain momentum, protect market stability, and preserve the positive trajectory our capital markets have achieved.”
Governor of Akwa Ibom State on Economic Reforms
During the forum, the Governor of Akwa Ibom state, Umo Eno, emphasized the introduction of bold fiscal and financial reforms, including the Investment and Securities Act 2025, the Insurance Industry Reform Act 2025, the new Tax Laws, and most notably, the deregulation of the electricity market.
He added that “In Akwa Ibom, we have already commenced the process of taking ownership of our power sector, laying the groundwork that will enable us to generate, transmit, and distribute electricity within the State. It is through such deeper unbundling that subnational governments can truly serve the interests of their people, attract private capital, and accelerate industrialization.”
Strategic Conversation on Nigeria’s Financial Landscape
Earlier in her remarks, Nancy Nnaji, Converner of the Forum, noted that it is a strategic conversation about Nigeria’s rewritten financial landscape, one that has been reshaped by fiscal and monetary reforms, new regulatory directions, and evolving market realities.
“It provides an opportunity to understand the implications of these changes, assess the emerging risks, and identify the pathways that lead to inclusive and sustainable wealth creation. Through today’s dialogue, our goal is to not only deepen understanding but to empower Nigerians with actionable knowledge, inspire collaboration across sectors, and promote responsible investment practices that will secure both individual and national prosperity,” she added.
Understanding the Capital Gain Tax
The Capital Gain Tax is imposed on chargeable gains arising from the sale of assets such as equities, all forms of properties, digital assets and others.
Daily Trust reports that stakeholders and members of the investing community have continued to raise concerns over the increase in capital gain tax in the new tax laws.
President of the Chartered Institute of Directors (CIoD), Otunba Adetunji Oyebanji, said the increment in capital gain tax in the tax reform law to be implemented from January 2026, may be a disincentive for high capital investment.
He stated that this is an area the institute believes should be looked into ahead of the implementation of the new laws.
According to the Presidential Fiscal Policy and Tax Reforms Committee, recent discussions around the impact of the Capital Gains Tax (CGT) reform on the capital market have included some misinterpretations and misinformation. While detailed implementation guidelines will be provided through official regulations, it is important to clarify the critical issues at this stage.
The committee said the new CGT framework represents a major improvement over the existing law. The reform makes investment in the Nigerian capital market more attractive, reduces investment risk, and ensures fair treatment of legitimate costs incurred by investors. In essence, the reform promotes equity and confidence in the market – not the reverse.
It said it reduces investment risk by allowing deductions for capital losses and other investment-related costs; protects small and institutional investors by providing exemptions for retail investors and tax-exempt institutions such as Pension Funds (PFAs) and Real Estate Investment Trusts (REITs); harmonises and simplifies tax administration by aligning CGT with income tax rules to promote progressivity, consistency, and ease of compliance.
The flat 10% CGT rate has been replaced with progressive income tax rates ranging from 0% to 30%, depending on the investor’s overall income or profit level. The top rate of 30%, which applies to large corporate investors, is expected to be reduced to 25% under the broader corporate tax reform.
“Investors may now deduct certain costs that were previously disallowed under the old CGT regime ensuring that they are not taxed on a net loss position,” the committee said.
Concerns from the Centre for the Promotion of Private Enterprise
The Founder/Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, had also faulted the 200 per cent increase in CGT.
He said, “So, from an investment point of view it’s not such a great idea and in this stage of our recovery we need to be conscious of the need to ensure that we do not anything that will impede investment, because what is happening in this particular case, I think the focus is more on revenue and that’s how it is coming across to me. People are making so much money from the capital market. Even if you have to increase, 30% is on the high side.”
Cautious Implementation of Tax Reforms
It would be recalled that the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, had pledged that the Federal Government will adopt a cautious and consultative approach in implementing the recently enacted tax reform laws, particularly the contentious capital gains tax (CGT) on securities transactions.
He spoke on Tuesday during the official listing of the N1 trillion Series 2 of the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund on the Nigerian Exchange (NGX), marking one of the largest real estate fund listings in the Exchange’s history.
NGX Recovers as Investors Gain N2.6trn
Meanwhile, the Nigerian equities market rebounded strongly on Wednesday, driven by bargain-hunting in blue-chip stocks, including some heavily priced banking names.
The Nigerian Exchange equities market capitalization climbed N2.59 trillion to N92.48 trillion, reflecting renewed buying momentum after a depressed performance the previous day. Market breadth was decisively positive, as 65 gainers overwhelmed 11 decliners yielding a robust 6x ratio. ACCESSCORP, MANSARD, NB, OANDO, and PZ topped the gainers’ list.
Specifically, the market index (All-Share Index) added 4,076.45 basis points in today’s trading session, reflecting a 2.88% increase to close at 145,403.83.
Total Volume of all trades and the total value traded increased by +22.93% and 72.77% respectively. Stockbrokers reported that approximately 806.39 million units valued at N50,777.60 million were transacted across 24,509 deals.
Investment firm Cowry Asset hinted that deal count fell 17.08% to 24,509 trades. This reflects heightened institutional activity through large block transactions, signalling strategic positioning as investors capitalize on attractive entry points following Tuesday’s sharp correction.
