Furthermore, the definition of Covered Taxes for the 15% Effective Tax Rate includes companies’ income tax, petroleum profits tax, hydrocarbon tax, development levy, and priority sector tax credits. This broad definition ensures that companies are given credit for the full range of their fiscal contributions, preventing double taxation. Consequently, the 15% Effective Tax Rate is not a deterrent to investment but a mechanism for fiscal sovereignty and fair competition. It actually increases Nigeria’s attractiveness, signalling that Nigeria provides a transparent, rules-based system.
Another misunderstood reform relates to capital gains taxation, now called “chargeable gains” in the NTA. Under the old Capital Gains Tax Act (CGTA), almost all capital gains were taxed at 10%, with very few exemptions. The law had outlived its usefulness, as it dated from 1967, when basic commodities still dominated Nigeria’s economy. The NTA modernises this entirely.
Market analysts fail to appreciate the shift from the current rigid, outdated CGTA to a flexible, integrated system that actively encourages reinvestment. The new regime integrates gains into the company’s total profit (taxed at a CIT rate of 30%) or into the individual’s income (taxed at Personal Income Tax rates ranging from 0 to 25%). While the rate appears higher, the exemptions, reliefs, and structural flexibilities introduced make the new system significantly more favourable for active investors. For example, the NTA introduces a comprehensive reinvestment relief for shares. Section 34 states: “Provided that gains accruing to a person on disposal of shares in any Nigerian company shall not be chargeable gains where the… (iii) proceeds from such disposal… are reinvested within the same year of assessment in the acquisition of shares in the same or other Nigerian companies…”. Contrary to critical narratives, this provision allows investors to rotate capital without tax friction. Under the old law, selling a strategic stake to reinvest in a new venture triggered a tax event. Under the NTA, provided the capital remains within the Nigerian economy, the tax is effectively 0%. This directly encourages portfolio fluidity and capital formation, debunking the claim that the law derails investment.
Furthermore, the NTA significantly improves loss treatment, reducing the risk profile for investors. By allowing capital losses to reduce the total taxable income (subject to certain ring-fencing for digital assets), the NTA essentially subsidises risk-taking. If an investment fails, the tax system absorbs part of the shock by lowering taxes on other profits. This is a pro-innovation policy stance that is highly attractive to Venture Capital and Private Equity.
In addition, the NTA introduces specific monetary thresholds that exempt lower-value transactions entirely, reducing the compliance burden for smaller investors and startups. Gains are exempt from tax where “disposal proceeds, in aggregate, are less than N150,000,000 and the chargeable gain does not exceed N10,000,000 in any 12 consecutive months.” This threshold protects most retail investors and small companies from capital gains tax, fostering a vibrant secondary market for securities. Under the old regime, companies could structure transactions to classify business profits as “capital gains” and pay a lower 10% tax. Now, corporate gains are taxed at the 30% corporate income tax rate, just like other business income. This closes a significant loophole without affecting ordinary investors.
In conclusion, Nigeria is not raising tax barriers; it is creating a stronger foundation for a modern, competitive economy. The reforms simplify taxes, safeguard vital incentives, align Nigeria with global standards, and protect ordinary Nigerians and investors alike. They close loopholes exploited by international corporations while maintaining incentives where they matter most. Investors, domestic and foreign, should see these reforms as a signal that Nigeria is serious about building a predictable, stable, investment-friendly environment and is open for business.
Fasua is the special adviser to President Tinubu on economic affairs
