Nigeria now has the highest headline capital gains tax rate among selected major African economies and one of the continent’s broadest regimes for taxing indirect transfers of Nigerian assets, according to a new report by PwC Nigeria.
The report titled: “Nigeria’s Capital Gains Tax Reforms: What the New 30% Rate and Indirect Transfer Rules Mean for Investors,” examines the significant changes introduced by the Nigeria Tax Act (NTA), which came into effect on January 1, 2026.
According to PwC, the reforms have fundamentally altered Nigeria’s capital gains tax (CGT) landscape by increasing the tax rate for companies from 10 per cent to 30 per cent and expanding the government’s taxing rights to cover certain offshore transactions involving Nigerian companies and assets.
Daily Trust reports that the changes imply that a transaction involving the sale of a foreign company in London, Dubai, Amsterdam, Johannesburg or another jurisdiction could now create tax consequences in Nigeria if the transaction results in a change in ownership of Nigerian companies or assets.
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What is CGT?
The CGT featured prominently in the debate prior to the passage of President Bola Ahmed Tinubu’s four tax reform bills by the National Assembly.
The Capital Gain Tax is imposed on chargeable gains arising from the sale of assets such as equities, all forms of properties, digital assets and others.
Daily Trust reports that stakeholders and members of the investing community have continued to raise concerns over the increase in capital gain tax in the new tax laws.
At a point the Senate Committee on capital market disclosed that N2 trillion was wiped out from the capital market over the CGT while calling on the government to revisit the Act.
Nigeria’s 30% CGT highest among selected African economies
However, PwC’s comparative analysis places Nigeria ahead of other major African economies in terms of its headline corporate capital gains tax rate.
The report puts Nigeria’s rate at 30 per cent, compared with 25 per cent in Ghana, 21.6 per cent in South Africa, 20 per cent in Morocco and 15 per cent in Kenya.
The 30 per cent rate represents a significant increase from the previous 10 per cent applicable to companies.
PwC said the increase aligns the taxation of capital gains more closely with Nigeria’s corporate income tax framework and forms part of the broader tax reforms introduced by the Federal Government.
Offshore transactions now face greater scrutiny
One of the most significant changes identified by PwC is the introduction of explicit provisions covering indirect transfers.
Under the new regime, a transaction does not necessarily have to involve the direct sale of shares in a Nigerian company before Nigerian CGT consequences arise.
The report explained that Section 17(2) of the NTA provides that gains derived by a non-resident from the disposal of chargeable assets may be 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 foreign entities 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.
Section 47 also provides that gains arising 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, or a change in ownership of, title in or interest in an asset located in Nigeria.
These provisions, PwC said, establish a framework for taxing indirect transfers of Nigerian assets.
Two interpretations of the new rules
However, the report noted that the interaction between the provisions could generate different interpretations.
The first interpretation is that the 50 per cent value threshold must be satisfied before CGT can apply.
Under this approach, foreign shares would only be treated as Nigerian assets if more than half of their value is derived from Nigerian assets. Consequently, if Nigerian assets account for less than 50 per cent of the value of a foreign company, the disposal of its shares would generally fall outside the scope of Nigerian CGT.
PwC noted that this interpretation could be easier to apply, particularly to listed groups where market values are readily available.
The second interpretation is that the change-of-ownership provision operates independently.
Under this view, CGT could apply whenever the sale of shares by a non-resident results in a change in ownership of a Nigerian company or Nigerian asset, irrespective of whether the foreign company meets the 50 per cent Nigerian-asset value threshold.
PwC said taxpayers would understandably prefer the first interpretation because it limits the scope of the tax. However, it acknowledged that there is a strong argument that the change-of-ownership provision was deliberately designed as a standalone charge to protect Nigeria’s taxing rights over transactions affecting Nigerian companies and assets.
Uncertainties remain
Despite the expanded taxing powers, PwC identified several areas where the new regime remains unclear.
One major issue is whether capital gains should be included in profits subject to the Development Levy.
PwC said there is uncertainty because capital gains are no longer dealt with under a standalone CGT regime. While there may be grounds for excluding capital gains from the levy, the issue requires clarification.
Another unresolved issue has to do with capital losses.
The NTA does not expressly state whether companies can deduct or utilise capital losses against capital gains.
While the law expressly permits individuals to deduct capital losses in determining their taxable income, the absence of a similar express provision for companies creates uncertainty.
There is also uncertainty over whether operating losses can be offset against capital gains and whether capital losses can be used against operating income.
Valuation could become a major challenge
PwC also highlighted valuation as one of the practical challenges investors could face under the indirect-transfer rules.
For listed companies, market prices can provide a relatively straightforward basis for valuation. However, determining the value of unlisted companies or assets held within complex corporate structures can require sophisticated valuation methodologies.
The absence of statutory guidance on valuation could increase compliance costs and potentially lead to disagreements between taxpayers and tax authorities.
The report also noted that the new laws do not prescribe how taxpayers should identify the cost base of shares acquired in different tranches and at different prices.
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For example, it is unclear whether taxpayers should use the first-in, first-out method or another recognised approach when calculating gains on the disposal of fungible shares.
Impact on investors
PwC said the new CGT regime is likely to influence how investors assess and structure investments involving Nigerian assets.
The combination of a 30 per cent tax rate and expanded indirect-transfer rules means that tax considerations will become increasingly important in cross-border transactions, corporate reorganisations and investment exits.
The report said investors are therefore expected to place greater emphasis on tax due diligence, valuation analysis and transaction planning.
At the same time, PwC said the reforms offer opportunities for investors to optimise their Nigerian investments through available exemptions, reinvestment reliefs and other incentives.
The firm also highlighted provisions that could provide relief for certain investors, including smaller investors and those reinvesting in Nigerian companies.
PwC said while the reforms strengthen Nigeria’s fiscal position by closing long-standing gaps in the tax system and ensuring that value derived from Nigerian assets remains within the country’s taxing jurisdiction, several technical and administrative questions remain unresolved.
Issues relating to capital losses, Development Levy, filing obligations, valuation, share identification and the potential step-up of the cost basis of assets acquired before 2026 could require further legislative amendments, regulations or administrative guidance.