FG Introduces 25% CGT to Curb Equity Flight, Analysts Warn of Dampened Returns

The Nigerian Federal Government has implemented a new Capital Gains Tax (CGT) rule, imposing a 25% tax on share disposal to discourage the shift of capital from equities to bonds. The rule exempts investors if the proceeds from share sales are reinvested in bonds or treasury bills.

However, investors are exempt if they reinvest in another Nigerian company, whether listed or unlisted. The measure aims to retain capital within the equity market to support business growth and job creation.

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy Tax Reforms Committee, highlighted that the rule mainly targets institutional players in the equity market. Analysts warn that the policy could impact investor sensitivity and dampen returns.

Foreign portfolio investments have seen significant fluctuations, with FPI inflows nearly tripling in July 2025.