The federal government has announced a major reform in Nigeria’s tax structure, scrapping the 10 percent capital gains tax and merging it with the corporate income tax (CIT).
The development comes as part of the newly enacted Nigerian Tax Act (NTA), which takes effect in January 2026.
Under the updated framework, the CIT remains at a flat rate of 30 percent for all companies except small businesses. Small companies — defined as those with a gross turnover not exceeding N50 million annually and total fixed assets not more than N250 million — will continue to enjoy a zero percent tax rate.
“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of a small company, at 0%; and (b) any other company, at the rate of 30 percent from the commencement of this Act,” the document states.
However, businesses offering professional services are excluded from the small company classification. The Act provides clarity on this, saying, “Professional services” refers to services provided by an individual or a firm having specialised knowledge, skills, and qualifications in specific fields, “including consulting, planning, or support services, excluding artisans or vocational services”.
A key provision in the new law introduces a minimum effective tax rate of 15 percent. If any company’s effective tax rate falls below this threshold, the company must pay an additional tax to meet the 15 percent minimum.
According to the Act, “Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15%, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15%.”
This rule applies to any company that is part of a multinational enterprise (MNE) group, or whose annual turnover equals or exceeds N20 billion.
The repealed Capital Gains Tax Act formally dissolves the 10 percent levy on asset gains, folding it into the CIT structure. This consolidation, according to TheCable, forms part of broader efforts to simplify Nigeria’s tax system.
Previously, on June 4, 2024, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, had proposed reducing the CIT rate by five percentage points. The goal, he explained, was to stimulate investment and business growth.
Oyedele said the move would bring down the tax rate from 30 percent to 25 percent to encourage businesses and investors.
In October 2024, TheCable reported that the National Assembly was considering a legislative amendment to cut the CIT to 27.5 percent in 2025, with a further reduction to 25 percent in 2026.
