What is Capital Gains Tax (CGT) in Nigeria?
Capital Gains Tax (CGT) is a federal tax charged on the gains (profit) made when you dispose of a chargeable asset in Nigeria — such as land, buildings, shares, plant and machinery, or business goodwill. It was historically governed by the Capital Gains Tax Act (CGTA) Cap C1, LFN 2004 at a flat rate of 10% of the chargeable gain. Under the Nigeria Tax Act 2025 (NTA 2025), the standalone CGT regime has been folded into the income tax system: from 1 January 2026, companies pay tax on chargeable gains at their Company Income Tax rate (up to 30%), while individuals pay at their Personal Income Tax rates. 'Disposal' includes sale, exchange, gift, compulsory acquisition, and loss or destruction where compensation is received. CGT is administered by the Nigerian Revenue Service (NRS, formerly FIRS) for companies, and by state Internal Revenue Services for individuals on most assets.
What is the CGT rate in Nigeria?
Under the Capital Gains Tax Act (CGTA), the classic rate was a flat 10% of the chargeable gain — that is, 10% of (disposal proceeds minus allowable costs), not 10% of the full sale price. Allowable costs include the original purchase price, incidental acquisition costs (legal fees, stamp duty, survey fees), improvement expenditure, and costs of disposal (agency fees, advertising, valuation). The Nigeria Tax Act 2025 changed this from 1 January 2026: chargeable gains of companies are now taxed at the applicable CIT rate (30% for large companies, 20% medium, 0% small), and gains of individuals are taxed at progressive Personal Income Tax rates. For disposals made before the NTA 2025 effective date, the 10% CGTA rate applies. Always confirm which regime covers your disposal date before computing.
Which assets are chargeable to CGT in Nigeria?
Chargeable assets include virtually all forms of property, whether located in Nigeria or (for Nigerian residents) abroad: (1) Land and buildings — commercial property, rental property, undeveloped land, (2) Shares and securities — including shares in private companies; the Finance Act 2021 brought disposals of Nigerian company shares worth ₦100 million or more in any 12 months into the tax net (reinvested proceeds are proportionately exempt; the NTA 2025 raised the exemption threshold), (3) Plant, machinery, and business equipment, (4) Goodwill and other intangible business assets, (5) Options, debts, and incorporeal property generally, (6) Foreign currency, (7) Digital and virtual assets — expressly chargeable since the Finance Act 2023 (this covers cryptocurrency). An asset does not need to have been acquired by purchase — assets received by gift or inheritance are still chargeable when you later dispose of them.
Which gains are exempt from CGT in Nigeria?
The main exemptions are: (1) Principal private residence — the gain on disposal of a dwelling house (including up to one acre of land) that was your only or main residence is exempt, (2) Nigerian government securities — gains on Federal Government bonds, treasury bills, and other government securities are exempt, (3) Small share disposals — disposals of Nigerian company shares below the statutory annual threshold, and share sale proceeds reinvested in Nigerian companies (proportionate exemption), (4) Motor cars — private passenger vehicles not used for business, (5) Life assurance policies — gains received by the original beneficial owner, (6) Charities, religious and educational institutions of a public character — where the gain is applied purely for the institution's purposes, (7) Compensation for personal injury (up to the statutory cap under NTA 2025), (8) Statutory bodies — gains by approved pension schemes and similar exempt bodies. Note that a second home, rental property, or commercial building never qualifies for the principal private residence exemption.
How do I calculate the chargeable gain on a property sale?
The chargeable gain is: disposal proceeds MINUS (acquisition cost + incidental acquisition costs + improvement expenditure + disposal costs). Example under the classic CGTA regime: you bought a shop in Lagos for ₦20 million (plus ₦1.5 million legal fees and stamp duty), spent ₦3.5 million on structural improvements, and sold it for ₦45 million paying ₦2 million in agency and legal fees. Chargeable gain = ₦45M − (₦20M + ₦1.5M + ₦3.5M + ₦2M) = ₦18 million. CGT at 10% = ₦1.8 million. Keep documentary evidence of every cost — purchase receipts, deeds, contractor invoices, agency agreements — because NRS can disallow any cost you cannot substantiate. Routine maintenance and repairs are not deductible; only capital improvements that enhance the asset's value count.
How and when do I file and pay CGT with NRS?
Companies file CGT computations with the Nigerian Revenue Service (NRS); individuals generally file with the state Internal Revenue Service of their residence (NRS handles individuals resident in the FCT, non-residents, and members of the armed forces and foreign service). Under the CGTA, returns of chargeable gains were due alongside income tax returns — companies computed and returned gains not later than 30 June and 31 December of the year the disposal occurred. Under the NTA 2025 regime, chargeable gains are simply reported within the company's annual CIT self-assessment return (due 6 months after financial year-end) or the individual's annual PIT return (due 31 March). Payment accompanies the return. Late filing and payment attract the standard penalties: a fixed late-filing penalty plus 10% of unpaid tax and interest at CBN MPR-linked rates. File even when you believe the gain is exempt — claiming the exemption on a return is safer than silence.
How does CGT interact with CIT when a company sells a business asset?
Historically, CGT and CIT were mutually exclusive on the same receipt: if a profit was taxed as trading income under CIT (for example, a real estate company selling houses it built for sale — trading stock), it was not also charged to CGT; conversely, the sale of a fixed/capital asset (an office building the company occupied, plant, goodwill on a business sale) fell under the 10% CGT, not CIT. The distinction turned on whether the asset was trading stock or a capital asset. A related wrinkle: on disposal of an asset that enjoyed capital allowances, a balancing charge (clawback of excess allowances, capped at allowances previously claimed) could arise under CIT alongside CGT on any gain above original cost. Under the NTA 2025, this dual system collapses — a company's chargeable gains are assessed within the CIT computation at the CIT rate, so the classification matters less for rate but still matters for reliefs, rollover, and loss treatment.
Can I legally reduce or defer CGT on an asset sale?
Yes — several lawful reliefs exist: (1) Rollover relief — if you dispose of a qualifying business asset (land, buildings, plant, ships, aircraft, goodwill) and reinvest the proceeds in a new asset of the same class for the business, the gain can be rolled over (deferred) into the new asset's base cost; partial reinvestment gives partial relief. (2) Share-sale reinvestment exemption — proceeds from Nigerian company shares reinvested in Nigerian companies within the statutory window are proportionately exempt. (3) Principal private residence exemption — plan disposals of your main home to use this. (4) Deduct every allowable cost — acquisition, improvement, and disposal costs all reduce the gain, so keep records. (5) Corporate reorganisation reliefs — transfers between related companies in an approved restructuring can be on a no-gain/no-loss basis, subject to anti-avoidance holding periods. What you cannot do: artificially undervalue the sale price (NRS can substitute market value, especially between connected persons) or split a disposal to dodge thresholds — both invite penalties and best-of-judgment assessments.
