The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has clarified that Nigeria’s new Capital Gains Tax (CGT) regime will not apply retroactively to investment profits earned before 2026.
This is according to a statement released by the committee outlining key features of the upcoming CGT reform, which will take effect from January 1, 2026, under the proposed Nigeria Tax Act 2025.
The Nigerian Exchange (NGX) shed N6.3 trillion in market value over seven trading sessions, including a record N4.7 trillion drop in a single day.
Market analysts have attributed part of this massive sell-off to investor uncertainty around the pending CGT reform, with many fearing taxes on unrealised or historical gains.
No Tax on Past Gains
At the core of the reform is a cost basis reset and a grandfathering provision — both designed to ensure that investors are taxed only on new gains made after the law becomes effective, not on historical profits.
According to Oyedele, this structure aims to make the new system fair, transparent, and forward-looking, easing investors’ fears about retroactive taxation.
His clarification comes at a sensitive time for the capital market, which has seen sharp losses in recent days.
“For the purpose of CGT effective from 1 January 2026, the cost base for existing investments will be reset to the higher of:
a) the actual acquisition cost; and
b) the closing market price as at 31 December 2025. This ensures fairness and prevents the application of the new rule to gains accrued before the new law takes effect.” – Taiwo Oyedele
“Transition arrangements – gains earned on shares up to 31 December 2025 will be grandfathered and only taxed upon disposal where applicable, based on the law as at that date.” Taiwo Oyedele
How the New CGT Will Work
Under the proposed rule, the cost base — the reference point for calculating capital gains — will be reset to the higher of two values:
- The original purchase price of the asset, or
- Its market value as of December 31, 2025.
This means investors who have seen their assets appreciate over time will not be taxed on those past gains. Only profits realised after 2025 will attract capital gains tax.
For instance:
If an investor bought shares at ₦10 and they rise to ₦30 by December 31, 2025, the ₦30 becomes the new cost base.
If those shares are later sold in 2026 for ₦40, only the ₦10 gain made after 2025 will be taxed. The ₦20 gain earned before the reform takes effect will remain untaxed.
Similarly, if another investor purchased shares at ₦20 in 2020, and the price climbs to ₦50 by the end of 2025, any sale in 2026 at ₦55 would only attract CGT on the ₦5 gain realised after the reset date. The ₦30 gain from earlier years would be fully grandfathered — exempt from taxation.
Bottom Line
Oyedele’s clarification offers much-needed reassurance to investors and market participants, signalling that the forthcoming tax reform seeks to modernise the system without penalising past success.
The move is expected to help stabilise investor confidence ahead of the 2026 rollout and support a smoother transition to a more equitable taxation framework.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.
