•Urges NRS to clarify process for crediting one percent of WHT toward final income tax
Nigeria’s Capital Gains Tax (CGT) regime has been significantly expanded under the Nigerian Tax Act 2025, and foreign company transactions may attract tax in Nigeria even where there is no direct disposal of shares in a Nigerian company.
PricewaterhouseCoopers (PwC), in a report titled: “Nigeria’s capital gains tax reforms: what the new 30% rate and indirect pass-through rules mean for investors,” said the new provisions could bring transactions executed outside Nigeria within the country’s tax net, where the value of the foreign company is derived primarily from Nigerian assets.
The Nigerian Tax Law 2025, which came into effect on January 1, 2026, raises the corporate CGT rate to 30 per cent, aligning it with the corporate income tax rate, and expressly provides for the taxation of certain indirect transfers.
Under the new rules, a transaction involving the sale of a foreign company in jurisdictions such as London, Dubai, Amsterdam or Johannesburg could trigger Nigerian CGT where the company derives more than 50 per cent of its value, directly or indirectly, from Nigerian assets.
PwC said the development represents a significant departure from the previous tax regime, under which gains from the disposal of shares were generally exempt. Direct disposals of shares in Nigerian companies became subject to CGT at 10 per cent from 2022, subject to specific exemptions.
The consultancy noted that Section 17(2) of the Nigerian Tax Law provides that gains made by a non-resident from the disposal of taxable assets are subject to tax in Nigeria, where the asset is located, or deemed to be located, in Nigeria.
It added that Section 46(f) treats shares or similar interests in foreign entities as if they were located in Nigeria if, at any time during the 365 days prior to their disposal, more than 50 per cent of their value is derived, directly or indirectly, from Nigerian assets.
Section 47, according to PwC, further provides that gains from the disposal of shares by a non-resident constitute taxable gains where the disposal results in a change in the ownership structure of a Nigerian company or a change in ownership of an asset located in Nigeria.
PwC, however, identified an area of uncertainty regarding the interpretation of the provisions.
He said one interpretation is that the 50 percent value threshold must be met first before a tax charge arises, while another view is that the change of ownership provision constitutes a stand-alone charging rule that is not dependent on the threshold.
The firm noted that taxpayers would generally favor the stricter interpretation, although there is a strong argument that the change of ownership provision was deliberately designed as a stand-alone basis for taxation.
The reforms, PwC said, place Nigeria among the most aggressive jurisdictions in Africa on CGT. He cited comparative rates of 21.60 percent in South Africa, 20 percent in Morocco, 15 percent in Kenya and 25 percent in Ghana.
It noted that many jurisdictions restrict indirect transfer rules primarily to interests that derive their value from mineral assets or real estate, making Nigeria’s combination of a 30 percent CGT rate and broad indirect transfer provisions particularly significant.
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PwC identified a number of other areas requiring clarification, including whether capital gains will form part of the gains subject to Development Tax, the treatment of capital losses, the interaction between trading losses and capital gains, filing requirements when a disposal results in a capital loss, share identification rules and valuation guidance.
The firm also raised questions about whether an increase in the cost base would apply to investments acquired before 2026.
Another concern is the possible taxation of nominal gains in naira when a foreign investor records an actual loss in dollar terms due to currency depreciation.
PwC said the changes have immediate implications for private equity funds, multinational companies and cross-border investors, making tax due diligence, valuation and exit planning increasingly important.
He advised investors to conduct detailed assessments of the Nigerian assets underlying the foreign companies before completing transactions, taking into account potential CGT liabilities in the structures and timing of the transactions.
The firm noted that investors could, however, benefit from other provisions of the new tax framework, including broader input VAT claims, the economic development incentive, exemptions available for smaller investors and rollover relief.
Meanwhile, PwC has urged the Nigerian Revenue Service (NRS) to provide more administrative guidance on the implementation of new tax rules affecting digital asset transactions.
It called for the NRS to publish a formal initiation notice, approved price aggregators, a list of supported tokens, and a clear process for crediting the one percent withholding deducted from taxpayers’ final tax liabilities.
The firm also urged the tax authority to clarify the N10 million stamp duty threshold, the treatment of corporate transfers between owned wallets, unsupported tokens, refunds and the respective collection responsibilities of the federal and state tax authorities.
According to PwC, a joint implementation protocol between the NRS and the Securities and Exchange Commission (SEC) would help align tax reporting, licensing, anti-money laundering controls and investor protection obligations.
It advised virtual asset service providers (VASPs) to conduct loophole and systems readiness assessments before activating tax deductions.
Taxpayers, he added, must obtain tax identification numbers, adopt a consistent cost-basis methodology and retain wallet records, exchange rate information and evidence of transactions for at least six years.
PwC said the framework provides a workable foundation, but contains important legal and implementation gaps that require clarification to ensure certainty, consistency and compliance among taxpayers and investors.
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