Nigerian Federal High Court: New Capital Gains Tax Rate Impacts Investors

• Nigeria now has a 30% headline corporate capital gains tax rate, one of the highest in Africa.
• The new law introduces explicit provisions covering indirect transfers, which can result in tax consequences for transactions involving foreign companies.
• Investors should be aware of the changes and take steps to mitigate potential tax liabilities.
• The reforms have significant implications for Nigeria's capital market, with some experts estimating that N2 trillion was wiped out from the market over the CGT.

The new law has fundamentally altered Nigeria's capital gains tax landscape by increasing the tax rate for companies from 10 per cent to 30 per cent and expanding the government's taxing rights to cover certain offshore transactions involving Nigerian companies and assets.

The Nigerian government's recent tax reforms have significantly altered the country's capital gains tax landscape. The new law, which came into effect on January 1, 2026, has increased the headline corporate capital gains tax rate from 10% to 30%, making it one of the highest in Africa. This change is part of a broader effort by the Federal Government to reform the country's tax system and align it with international best practices. According to PwC Nigeria, the reforms have fundamentally altered the taxation of indirect transfers, which can now result in tax consequences for transactions involving foreign companies if they lead to changes in ownership or asset valuations.

The new law has introduced explicit provisions covering indirect transfers, which have significant implications for investors. Under the new regime, a transaction does not necessarily need to involve the direct sale of shares in a Nigerian company before CGT consequences arise. The interaction between different sections of the law can generate different interpretations, with some experts arguing that the 50% value threshold must be satisfied before CGT can apply. However, others believe that this threshold is merely a trigger for further scrutiny, rather than an absolute requirement.

The new capital gains tax rate of 30% and indirect transfer rules may create tax consequences for transactions involving foreign companies, requiring careful consideration of ownership structures and asset valuations. Lawyers advising clients on investments in Nigeria should be aware of these changes and take steps to mitigate potential tax liabilities. The reforms have significant implications for the country's capital market, with some experts estimating that N2 trillion was wiped out from the market over the CGT. However, others believe that the increased tax rate will ultimately benefit the economy by generating more revenue for the government.

Lawyers advising clients on investments in Nigeria should be aware that the new capital gains tax rate of 30% and indirect transfer rules may create tax consequences for transactions involving foreign companies, requiring careful consideration of ownership structures and asset valuations.

Source: Original reporting via PwC Nigeria report