99% of stock market investors exempt from capital gains tax

By Chukwuma Umeorah

Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has said that the Federal Government’s proposed capital gains tax (CGT) framework will not affect the vast majority of participants in Nigeria’s stock market, with more than 99 per cent of investors exempted,

Oyedele disclosed this during a stakeholders’ engagement with journalists in Lagos, explaining that the new tax laws were structured to protect small and retail investors, preserve market liquidity and correct widespread misinformation that has unsettled the equities market in recent weeks.

According to him, investors who sell shares worth not more than N150 million within any 12-month period, with capital gains of up to N10 million, are permanently exempt from capital gains tax without any conditions. He said this threshold alone covers more than 99 per cent of market participants.

“All investors are tax exempt in the capital markets. Ninety-nine per cent of them, the exemption is unconditional,” Oyedele said. “If you sell not more than N150 million naira of shares in a year, with gains not more than N10 million, you are permanently exempted, no questions asked”.

He added that institutional investors such as pension funds, mutual funds and real estate investment trusts (REITs) are also unconditionally exempt, further narrowing the group of investors that could potentially be subject to CGT under the new regime.

For the small fraction of investors outside these categories, Oyedele said the law provides an option to avoid CGT entirely by reinvesting proceeds from share sales within the market. According to him, gains from such transactions would remain exempt if reinvestment is done within the stipulated period.

“Whatever is left of that one per cent, we now say to them, if you don’t want to pay capital gains tax, please reinvest your proceeds,” he said .

Oyedele stressed that the design was deliberate, noting that the government avoided imposing holding-period requirements, which could have reduced market liquidity. He explained that evidence from other jurisdictions shows that forcing investors to hold shares for extended periods before qualifying for tax relief often discourages trading and weakens market depth.

The committee chairman also pushed back against claims that the proposed CGT triggered recent volatility in the equities market. He said available data does not support the narrative that investors sold off shares in reaction to the tax proposal.

Recall that in one of the worst single-day downturns in recent history, the Nigerian Exchange (NGX) lost about N4.6 trillion in market capitalisation on 11 November 2025, when the NGX All-Share Index (ASI) plunged by 5.01 per cent to 141,327.30 points from 148,781.90 points, as bellwether stocks, including Dangote Cement Plc, MTN Nigeria Communications Plc and BUA Cement Plc, all closed down sharply. Analysts at the time attributed the sell-off partly to panic profit-taking and unsettled investor sentiment over the impending capital gains tax and other macro risks, though the exact contribution of CGT fears was debated among market commentators.

Citing market statistics from that major sell-off session, Oyedele said the average transaction size was about N1.16 million, far below the exemption threshold of N150 million, making it illogical to link the activity to capital gains tax fears.

“Why would anybody who is having N1 million naira panic to go and sell off when they have an exemption of up to 150 million naira?” he asked, arguing that fear-driven narratives, rather than policy fundamentals, fueled market reactions .

He disclosed that Nigeria’s stock market had gained about 45 per cent year-to-date before the controversy, ranking among the best-performing markets globally, and had also recorded strong gains in dollar terms due to exchange rate movements. According to him, sustained negative commentary around CGT reversed sentiment and contributed to sharp losses.

Oyedele further noted that total capital gains tax collected by the Federal Inland Revenue Service (FIRS) in a previous year was about N52 billion, questioning the logic of market losses running into trillions of naira being attributed to a tax that yields relatively modest revenue.

“Who loses trillions because they are running away from N52 billion?” he asked.

Beyond CGT, Oyedele said the new tax laws introduce several incentives aimed at strengthening the capital market, including exemptions on bonus shares, stamp duties and withholding taxes, as well as a reduction in companies income tax (CIT) from 30 per cent to 25 per cent to improve corporate profitability and investor returns.

He maintained that, taken together, the reforms make Nigeria’s capital market more attractive, particularly for long-term investors, while safeguarding retail participation.

Oyedele urged the media and market stakeholders to rely on data and full context when reporting on reforms, warning that sustained misinformation could erode confidence and harm investors.

“People react to rumour. People react to fear,” he said, adding that inaccurate narratives can translate into real losses for ordinary investors.