Nigeria’s tax reform chief, Taiwo Oyedele, has sought to calm investor nerves by clarifying that investment gains made before the start of the new tax regime will not be subject to taxation under the forthcoming Capital Gains Tax (CGT) law.
In a statement released on 12 November 2025, Oyedele, who chairs the Presidential Fiscal Policy and Tax Reforms Committee, stressed that the new CGT framework under the proposed Nigeria Tax Act 2025 — set to take effect from 1 January 2026 — will not retroactively tax gains accrued prior to December 31, 2025.
Key Clarifications from Oyedele
- A cost-basis reset will apply: for existing investments, the cost base for gains will be reset to whichever is higher — the original acquisition cost or the closing market price as of 31 December 2025.
- A grandfathering clause ensures that gains realised up to 31 December 2025 are preserved and will not be taxed under the new CGT regime. Only gains made after the reform takes effect will be subject to the new law.
- Oyedele emphasised that the reform is designed for progressive taxation, protecting low-income investors and small portfolios while focusing higher tax rates on larger capital gains. He noted that the move aligns with international best practices and is not intended to stifle investment.
Government Response and Stakeholder Engagement
The Minister of Finance, Wale Edun, said the government has “heard” the concerns of market participants and remains committed to a consultative approach in implementing the reforms.
Speaking at a recent investment event, Edun assured stakeholders that the reforms will be carefully analysed to strike a balance between revenue generation and market stability.
Market Reaction
The clarification comes amid a period of volatility in Nigeria’s capital market.
The Nigerian Exchange (NGX) has suffered steep losses, with market capitalisation plunging by N4.6 trillion in a single day, and a total loss of N6.3 trillion over just seven trading sessions.
Analysts attribute the sell-offs largely to investor uncertainty about how the CGT reforms would affect existing investments. Some market participants feared that previously accumulated gains might be taxed, prompting panic selling, especially among large institutional investors and foreign portfolio holders.
Foreign investors have also expressed concern about the pace and tone of the reform communication, describing the initial rollout as heavy-handed and insufficiently sensitive to market sentiment.
Market Losses to Date
- On 11 November 2025, the NGX All-Share Index dropped by about 5.01%, falling to 141,327.30 points. Market capitalisation declined from N94.5 trillion to N89.9 trillion, representing a one-day loss of N4.64 trillion.
- Over six trading sessions in early November, the “SWOOTs” (Stocks Worth Over One Trillion) category lost around N2.75 trillion, a decline of roughly 3.2%.
- The broader market has lost more than N6.3 trillion in total value since the reform announcement, reflecting heightened investor anxiety and significant sell-offs across major sectors.
Interpretation
These losses underline the market’s sensitivity to fiscal policy changes. The combination of tax-policy uncertainty and external macroeconomic pressures has triggered accelerated outflows and eroded market value. Oyedele’s clarification is therefore seen as a critical step to restore investor confidence and stabilise the market.
Final Takeaway
For investors in Nigeria:
- Good news: Gains made before 31 December 2025 will not be taxed under the new CGT regime starting 1 January 2026.
- Caution: Despite the clarification, market sentiment remains fragile, and significant value has already been lost.
- What to watch: Implementation details — including tax rates, exemptions, and reinvestment reliefs — will determine the reform’s long-term impact on liquidity, foreign investment flows, and capital market stability.
