Senate urges finance minister to review 30% capital gains tax after N2trn market loss

The Senate has called on Minister of Finance and Coordinating Minister of the Economy, Wale Edun, to urgently review the newly introduced 30 percent Capital Gains Tax (CGT) on large share sales, following a N2 trillion loss on the Nigerian Stock Exchange last week.

The tax increase, included in the Nigerian Tax Act 2025, raises CGT on share disposals worth N150 million and above from 10 percent to 30 percent, with implementation scheduled for January 2026.

Senator Osita Izunaso, Chairman of the Senate Committee on Capital Market and Institutions, made the appeal on Wednesday while presenting a paper titled “Redefining the Rules: The Investment and Securities Act 2025 and the Future of Nigeria’s Capital Market” at the Moneyline with Nancy Investment Forum 2025 in Abuja.

Izunaso said the sudden adjustment in the tax regime has unsettled investors, triggering panic-driven share sales that erased over N2 trillion in market value within a week.

He praised President Bola Ahmed Tinubu for revitalising the Nigerian capital market since 2023, noting that reforms had stabilised the macroeconomic environment and strengthened policy coherence.

“However, the recent increase in Capital Gains Tax on share sales above N150 million has caused understandable concern among investors,” Izunaso said.

“We observed significant disposals by major investors, leading to a sharp decline in market capitalisation in just a few days.”

He stressed that while taxation is essential for revenue generation, fiscal policies must avoid undermining investor confidence or discouraging long-term investment.

The Senate Committee on Capital Market plans to engage Minister Edun to explore mechanisms that protect both domestic and foreign investors and maintain market stability.

Izunaso suggested that the Finance Minister exercise discretion in implementing certain provisions of the new tax law, particularly those with far-reaching impacts on capital formation.

“The law is set to commence in January 2026, but some provisions should only take effect once the Minister advises the Executive.

“This is necessary because the market is already being affected,” he explained.

In response, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, clarified that the new CGT framework will not retroactively tax gains made before 2026.

A cost basis reset and a grandfathering clause will preserve old gains while applying the tax only to profits earned after the reform takes effect.

Meanwhile, Edun has pledged that the Federal Government will adopt a cautious and consultative approach in implementing the new tax reforms, particularly the contentious CGT on securities transactions, to avoid further market disruption.