Nigeria’s capital gains tax (CGT) regime has entered a new era, with the commencement of the Nigeria Tax Act (NTA) on January 1, 2026, introducing a higher tax rate for companies, wider taxing powers and new rules that could expose offshore transactions involving Nigerian assets to tax in Nigeria.
A new analysis by PwC Nigeria said the reforms represent one of the most significant changes to Nigeria’s CGT framework in decades, with implications for investors, multinational companies, entrepreneurs and businesses using offshore holding structures.
Under the new regime, a transaction involving the sale of a foreign company in jurisdictions such as London, Dubai, Amsterdam or Johannesburg could create Nigerian tax consequences where the transaction indirectly changes ownership of Nigerian companies or assets.
CGT Regime Undergoes Major Transformation
PwC Nigeria, in its publication titled Nigeria’s Capital Gains Tax Reforms: What the New 30% Rate and Direct Transfer Rules Mean for Investors, explained that Nigeria’s CGT framework has evolved considerably since the tax was introduced in 1967.
Capital gains tax was initially imposed at 20 per cent before being reduced to 10 per cent under the Investments and Securities Decree and subsequently consolidated under the Capital Gains Tax Act.
For many years, gains arising from the disposal of shares were exempt from CGT. The exemption, coupled with the lower CGT rate compared with income tax, helped make equity investment and business disposals more attractive to investors and entrepreneurs.
That position changed in 2022 when gains from the direct disposal of shares in Nigerian companies became subject to CGT at 10 per cent, subject to specified exemption conditions.
Taxpayers were also required to compute, pay and file relevant returns by June 30 or December 31 of the year in which the disposal occurred.
The latest reforms have now moved the regime substantially further.
Companies Face 30% CGT Rate
One of the most significant changes introduced by the NTA is the increase in the CGT rate applicable to companies from 10 per cent to 30 per cent.
The new rate brings capital gains taxation broadly in line with the corporate income tax rate and represents a major shift in the cost of disposing of chargeable assets.
According to PwC Nigeria, the change is part of the government’s broader effort to create a more unified framework for taxing income and gains while strengthening domestic revenue mobilisation.
The higher rate could also become an important consideration in mergers and acquisitions, corporate restructuring, investment exits and other transactions involving the disposal of assets or interests.
Offshore Transactions Now Face Greater Nigerian Tax Exposure
Perhaps the most far-reaching aspect of the reforms is the explicit extension of CGT to certain indirect transfers.
Under the NTA, gains arising from the disposal of shares or interests in foreign entities can potentially fall within Nigeria’s tax jurisdiction where those interests derive significant value from Nigerian assets.
PwC noted that Section 17(2) of the NTA provides that gains derived by a non-resident from the disposal of chargeable assets are taxable in Nigeria where the asset is located in Nigeria or is deemed to be located in Nigeria.
Section 46(f) further provides that shares or comparable interests in a foreign entity may be deemed to be located in Nigeria where, at any time during the 365 days preceding their disposal, more than 50 per cent of their value is derived, directly or indirectly, from Nigerian assets.
This means that the tax implications of an offshore transaction can no longer be assessed solely by looking at where the transaction takes place.
Foreign Company Sales Could Trigger Nigerian CGT
The new rules could have significant implications for multinational groups and investors that hold Nigerian businesses through foreign entities.
Section 47 of the NTA provides that gains accruing from the disposal of shares by a non-resident may constitute chargeable gains where the transaction results in a change in the ownership structure or group membership of a Nigerian company.
The provision also covers situations involving a change in ownership of, title in, or interest in an asset located in Nigeria.
Consequently, a transaction executed entirely outside Nigeria could potentially have Nigerian CGT consequences if the transaction indirectly produces a change in ownership or control involving Nigerian assets.
The development is particularly important for businesses with multi-layered corporate structures and investors considering exits through offshore holding companies.
End of the Era of Treating Offshore Structures as Outside Nigeria’s Tax Net
The reforms signal a broader policy direction: Nigeria intends to preserve its taxing rights over value generated by assets located within its jurisdiction, regardless of whether the legal transaction occurs within or outside the country.
For investors, this means that the location of the buyer, seller or holding company may no longer be sufficient to determine whether Nigerian CGT applies.
Instead, the underlying economic connection between the disposed interest and Nigerian assets could become a critical factor in determining tax exposure.
The development is expected to increase the importance of tax due diligence before completing cross-border mergers, acquisitions, restructuring exercises and investment exits.
Technical Questions Remain
Despite the expanded framework, PwC Nigeria identified areas of uncertainty that could require further clarification through legislation, regulations or administrative guidance.
One of the emerging questions concerns the applicability of development levy to capital gains.
Another issue is the absence of express provisions dealing with the deduction or utilisation of capital losses.
These uncertainties could create challenges for taxpayers seeking to determine their precise liabilities under the new regime, particularly where transactions involve complex asset structures or cross-border arrangements.
Implications for Investors and Businesses
The new CGT regime means investors and companies will need to factor Nigerian tax considerations into transactions at an earlier stage.
Businesses contemplating asset disposals, corporate restructuring, mergers, acquisitions or offshore transactions involving Nigerian assets may need to reassess their transaction structures and potential tax liabilities before closing deals.
For multinational groups, the indirect-transfer provisions could make ownership structures, asset valuation and the source of value increasingly important components of transaction planning.
Tax compliance is also likely to become more demanding as the authorities seek to identify transactions that fall within the expanded Nigerian taxing rights.
A New Era for Nigeria’s Capital Gains Tax
PwC Nigeria said the reforms have significantly modernised the CGT regime by bringing the taxation of capital gains closer to the broader income tax framework and expanding Nigeria’s reach to indirect transfers.
The changes strengthen Nigeria’s ability to tax gains derived from Nigerian assets, even where the immediate transaction occurs offshore.
However, the professional services firm noted that the transition to the new regime has generated questions that may require additional clarification to ensure consistent implementation and provide taxpayers with greater certainty.
For investors and businesses, the message is clear: the tax implications of a transaction involving Nigerian assets can no longer be determined simply by where the transaction is executed.
With the CGT rate for companies now at 30 per cent and indirect transfers brought more firmly into focus, tax planning, transaction structuring and compliance will become increasingly important considerations in Nigeria’s investment and corporate landscape.
Source: PwC Nigeria, “Nigeria’s Capital Gains Tax Reforms,” published August 17, 2026.
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