Capital gains tax will boost market competitiveness, says Taiwo Oyedele

Taiwo Oyedele, chairman of the presidential fiscal policy and tax reforms committee, says the new capital gains tax (CGT) will make Nigeria’s capital market more competitive and investor-friendly.

Oyedele spoke on Wednesday during a virtual public lecture organised by the Capital Market Academics of Nigeria (CMAN), according to NAN.

The tax expert said despite some misconceptions, the CGT is among the lowest taxes when compared with the companies income tax (CIT) and value-added tax (VAT).

The chairman said many developed and developing countries, including resource-rich nations, tax capital gains at the same rate as normal income tax.

Citing data from the Federal Inland Revenue Service (FIRS), Oyedele said between 2014 and 2024, CIT amounted to N26 trillion, VAT totalled N22 trillion, while CGT contributed only N276 billion — less than 1 percent of the other two taxes.

He said alongside the reduction in CIT from 30 percent to 25 percent, businesses are expected to become more profitable, resulting in higher valuations.

Highlighting the advantages of the new tax reforms, the committee chair said the introduction of input VAT credits on assets and overheads not previously applicable would help reduce operating costs and improve business cash flow.

He added that the policy also provides CGT exemptions for retail investors, re-investment, pension funds, real estate investment trusts (REITs), securities lending, and reorganisations.

”The policy will ensure deduction for capital losses and other incidental costs, eliminate Withholding Tax (WHT) on bonus shares, create a level playing field for listed vs unlisted entities such as free zone tax regime,” Oyedele said.

”It will also ensure stamp duty exemption for all documents relating to the transfer of stocks and shares, harmonisation of earmarked taxes such as TET, NITDA levy, and NASENI.”

The chairman said the tax policy would help to moderate excessive fees and levies by government agencies.

Also speaking, Umaru Kwairanga, chairman of the Nigerian Exchange Group (NGX), said the CGT is not new to Nigeria’s capital market, but recent reforms have triggered concerns that the tax burden might rise in ways that could hurt investors.

“We have seen that in the recent volatility in our market,” he said.

“It is therefore very important to manage information very well so that it does not lead to wrong or flawed perceptions that can have very real effects on markets and the economy.”

‘CGT WILL NOT HARM THE MARKET’

Innocent Ohagwu, president of the Chartered Institute of Taxation of Nigeria (CITN), said the CGT will not harm the market but instead lead to profit, noting that extensive work had gone into designing the framework.

He urged stakeholders to allow the policy to operate before drawing conclusions.

On his part, Muhammad Nami, the former chairman of FIRS, called for wider stakeholders’ engagement to address problems facing investment decisions in the country.