By Kayode Lawrence-Omole
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A New Way of Thinking About Gains
When the Nigeria Tax Act, 2025 (“NTA 2025”) was released, many people instinctively went searching for the familiar. They looked for the sections on capital gains tax, the treatment of disposals, perhaps a reference to the old 10% rate. What they found instead was absence: the Capital Gains Tax Act had been swept away, repealed outright under Section 196 of the NTA
For years, CGT sat quietly in the background of Nigerian tax planning. It was not controversial, not particularly complex, and not especially feared. It was simply there, a flat 10% levy, predictable and almost comforting in its simplicity. Gain of ₦100 million? Pay ₦10 million. End of story.
But modern commerce had long outgrown this model, and the law finally caught up. With the NTA 2025, Nigeria did not merely “revise” CGT. It replaced the entire philosophical foundation behind it. Gains, the Act now says, are income; not a special category, not a privileged class, not a side note. Just income.
And income is taxed at ordinary rates.
This piece explores how that shift happened, what the law now says, and how businesses and individuals should think about asset disposals going forward.
The Old Regime and Why It Couldn’t Survive
For decades, Nigeria’s CGT system rested on a simple idea, that is, disposals of many kinds of assets should attract a tax separate from income tax. In the analogue world, that made sense. When you sold a house, a parcel of land, machinery, or shares in a local company, the gain felt somehow different from salaries or trading income. It was a one-off event, not a recurring activity.
But reality evolved. The economy digitised. Wealth creation changed form. Companies became groups, groups became global, and assets became intangible. A growing share of Nigerian-derived value was realised offshore, or within complex structures that existing law could not easily reach.
The 10% CGT rate was attractive, but it was also porous. Offshore transfers escaped it. Fragmented disposals diluted it. Digital businesses defied its assumptions. And tax administrators frequently found themselves navigating rules drafted in a world that no longer existed.
The repeal of the CGT Act under Section 196 was simply an honest admission that the old architecture could not do the job anymore.
Gains Reimagined: They Are Now Ordinary Income
The NTA 2025 adopts a much cleaner approach. A gain is income. Nothing more, nothing less.
This is stated plainly in Section 4(1), which lists the categories of income now subject to tax, including profits or gains from the disposal of property or fixed assets,[1] profits or gains from the disposal or lending of securities,[2] and profits or gains from transactions in digital or virtual assets.[3]
For companies, these gains become part of “total profits” [4] and are taxed at the ordinary corporate tax rate.
For individuals, they become part of “taxable income”[5] and are taxed at personal income tax rates.
There is something refreshing about the simplicity of this design. It does not attempt to distinguish between types of value once realised. If value is crystallised in a disposal, then that value is income. And if it is income, it is taxed at the same rate as all other income.
Chargeable Gains Still Exist — But They are No Longer a Separate Tax Base
A curious thing happens when you read Part VIII (Sections 33–47) of the NTA 2025. It looks a lot like the computational machinery of the old CGT Act. There are rules on chargeable gains, chargeable assets, disposals, valuation, part-disposals, market-value substitution, and so on.
But these provisions no longer lead to a 10% levy. Instead, they deliver a number; the chargeable gain, which is then fed into ordinary income.
A Modern Law for Modern Value Creation: Nexus, Location, and Substance
The most forward-looking part of the new gains regime, and arguably the most transformative, lies in how it answers the question: When does Nigeria have the right to tax a gain?
Non-residents gains are taxable when value is Nigerian. Section 17(2) makes non-residents taxable on gains relating to a business carried on in Nigeria, assets located in Nigeria, or assets deemed located in Nigeria.
This deeming rule opens the door to a more realistic approach.
Under Section 46, an asset may be considered located in Nigeria if its value is substantially derived from Nigeria. In today’s world, where corporate value often arises from Nigerian users, Nigerian infrastructure, Nigerian contracts, Nigerian employees, and Nigerian data, this provision ensures the law keeps pace with economic reality.
Importantly, Section 47 tackles a familiar structure used in many cross-border transactions. A foreign holding company sits at the top, a Nigerian operating company sits beneath it, and the actual sale takes place entirely offshore. Under the old regime, this arrangement usually meant the Nigerian tax net never came into the picture; the shares being sold were foreign, the buyer and seller were foreign, and the contract was signed abroad.
The NTA 2025 changes that logic. What matters now is where the underlying value sits, not where the sale agreement is executed. So if a foreign parent company derives a substantial part of its value from a Nigerian subsidiary, the portion of the gain attributable to the Nigerian business becomes taxable in Nigeria, even though the transaction happens offshore.
It is a simple idea with wide consequences.
How Gains Are Calculated: A Practical Walk-Through
The computational machinery of the new gains regime sits in Sections 33–45 of the NTA.
Every gain begins with the basic formula:
Chargeable Gain = Disposal Consideration – Allowable Cost (Tax Base)
Allowable cost includes acquisition costs, improvement expenditures, and costs incurred wholly and exclusively in connection with the disposal.
Also, the law anticipates situations where:
- parties transact at non-market prices,
- consideration is not ascertainable, or
- related parties structure disposals creatively.
In such cases, Sections 36 and 45 empower the Federal Inland Revenue Service (FIRS)[6] to substitute market value.
Sector Realities: What This Means on the Ground
- Finance and Capital Markets
Banks and asset managers routinely dispose of loan books, trading portfolios, structured instruments, and proprietary stakes.
These disposals now fall under Section 4(1)(g) and 4(1)(i) and are taxed at ordinary rates.
The practical implication is that routine portfolio rebalancing carries more tax weight than before.
- Technology and Digital Firms
Tech businesses often store enterprise value offshore while creating economic value onshore. Under Sections 46 and 47:
- offshore exits may be taxed,
- digital assets produce taxable gains, and
- user-base-driven value can create Nigerian nexus.
For founders thinking about future exits, this is a structural change.
- Oil & Gas and Energy
The combination of deemed-location rules and indirect-transfer rules means that pipeline disposals, asset divestments, and midstream restructurings are more directly within Nigerian taxing rights.
Modelling disposals now requires tax forecasts in line with the NTA.
- Real Estate and Infrastructure
Property sales are squarely within Section 4(1)(i) of the NTA.
But the more subtle impacts lie in concession transfers, project SPV disposals, airport terminal rights, and toll road exits.
These transactions frequently involve complex valuation questions, making Sections 36 and 45 central to negotiations.
- Manufacturing, Telecoms, and Logistics
Asset-heavy industries have always accepted that disposals are part of their lifecycle selling fleets, renewing machinery, upgrading towers.
What changes under Section 4 is that these disposals now attract significantly higher tax.
CFOs in these sectors will need to rethink replacement cycles and depreciation strategies.
Governance, Documentation, and Compliance: A New Standard
The shift from a standalone CGT regime to an income-tax approach does more than change tax rates; it changes corporate behaviour. Under the NTA 2025, gains sit at the centre of ordinary income computation. That means disposals can no longer be treated as occasional, low-impact events. They now influence profitability, dividend capacity, and group tax positions in direct and measurable ways.
This inevitably elevates the role of Boards, CFOs, and senior finance executives in disposal planning. What used to be a transaction-by-transaction consideration becomes part of ongoing financial governance.
- Board and CFO Accountability
Because chargeable gains feed directly into total profits under Section 27, their impact is no longer marginal. A significant disposal can change a company’s tax charge for the year, reshape its distributable profits, or alter the economics of a restructuring. Boards therefore need to treat disposals as strategic decisions, not merely operational ones.
This requires a more deliberate approach on several fronts:
- Disposal timing: The timing of a disposal now has a real effect on tax exposure, effective rates, and annual profit reporting. Boards must consider whether a disposal aligns with the group’s broader financial calendar and capital plans.
- Valuation methodologies: Sections 36 and 45 give FIRS the power to substitute fair market value where declared consideration appears understated or unclear. Boards must ensure valuation reports are independent, defensible, and consistent with commercial reality.
- Documentation of cost base and improvements: Chargeable gains under Section 39 depend heavily on accurate cost base records. Boards must be satisfied that acquisition documents, improvement expenses, and transaction costs are properly recorded and retained.
In short, the governance burden around disposals increases; not because the law has become more complex, but because the tax consequences have become more significant.
- Documentation — A Statutory Necessity
The NTA 2025 anticipates a documentation-heavy environment. Part VIII (Sections 33–47) requires clear and verifiable evidence for:
- acquisition costs
- capital improvements
- consideration and its components
- market value substitutions
- apportionment for part disposals
In practical terms, this means taxpayers must maintain audit-ready files long before a transaction occurs. Incomplete paper trails, especially around historic assets, can lead to higher tax exposures because unsubstantiated costs cannot be included in the tax base.
Preparing for 2026 and Beyond
The transition from a 10% CGT regime to an income-based model is significant, but it is manageable with foresight. Businesses do need to plan.
The most effective preparations are not complex. They involve inventory, policy alignment, and strategic integration.
- Review Unrealised Gains
The first step is simply knowing what sits on the balance sheet.
Companies should identify assets with significant latent gains and examine whether planned disposals make sense before the full force of the income-based rules applies. This may include:
- non-core assets,
- legacy real estate,
- old equipment due for upgrade,
- minority equity stakes, and
- business lines already earmarked for divestment.
The objective is not to rush sales, but to ensure timing aligns with commercial and tax logic.
- Update Internal Policies
Internal tax and finance policies must reflect Part VIII’s computational rules.
This includes:
- standardising valuation requirements,
- updating disposal checklists,
- formalising documentation of acquisition costs,
- tracking improvement expenditure more rigorously, and
- adopting templates that mirror the evidence the Act expects.
Disposals are no longer “low-governance” events. The policies surrounding them shouldn’t be either.
- Integrate Gains Taxation into Strategy
Perhaps the most important change is conceptual. Gains are now part of ordinary income. They need to be treated as such in long-term planning.
This means integrating gains taxation into:
- capital budgeting — as disposals now affect annual tax charges;
- M&A strategy — as acquisitions and divestments may create taxable gains;
- investment committee papers — which must reflect the full tax lifecycle of assets;
- long-term financial planning — particularly around dividend expectations, cash flow analysis, and shareholder communication.
Gains can no longer be modelled as isolated events with a flat 10% haircut. They are now woven into the financial fabric of the organisation.
Closing Thoughts: A Clearer, More Coherent System
By repealing the CGT Act and embedding gains within the income-tax framework the NTA 2025 brings coherence to an area that had grown outdated. The law now acknowledges a simple truth: whether value arises from operations, investments, digital assets, or disposals, it is still value.
And value, when realised, is income.
This new clarity brings responsibilities; better documentation, stronger governance, and more thoughtful planning, but it also brings consistency. For a modern, complex, digital economy, that trade-off is not only reasonable; it is necessary.
As Nigeria moves into the post-CGT era, the taxpayers who understand the logic of the NTA and align their commercial decisions accordingly will navigate the transition with confidence and advantage.
Key Contact: Kayode Lawrence-Omole, Tax, Compliance and Risk Expert
Email: olukayode.lawrence-omole@dentons.com, Tel: +2348077771670
[1] Section 4(1)(i)
[2] Section 4(1)(g)
[3] Section 4(1)(j)
[4] Section 27(1)
[5] Section 28(2)(a)(v)
[6] To be known as the Nigerian Revenue Service (NRS) from 1 January 2026
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