REFORM TALKS with Enam Obiosio
I have followed Nigeria’s long and winding tax reform journey with a mix of curiosity, frustration, and hope. Over the years I have watched policies swing like a pendulum, often in reaction rather than in anticipation. So when I listened to Mr. Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, speak about the revised Capital Gains Tax rate and other adjustments expected in 2026, I found myself weighing his words as both a citizen and someone who believes that tax policy can either deepen economic confidence or slowly drain it. His announcement that the government plans to bring the Capital Gains Tax (CGT) down from the newly established 30 percent to at least 25 percent next year struck me as an important moment, one that demands honest reflection.
According to Oyedele, there is already a plan to ensure that by 2026, capital gains realised from the sale of shares or other equity instruments will eventually be taxed at 25 percent. I took note of how clearly he stated that the rule applies to everyone. There will be no distinction between local or foreign investors. For me, that single clarification carries weight because Nigeria has struggled for years with the perception that its tax space is unpredictable, sometimes selective, sometimes confusing. Removing distinctions reinforces the message that the rules will be applied fairly, and fairness is one of the few things that can calm jittery investors.
The new Nigeria Tax Act of 2025 raised the CGT from 10 percent to 30 percent, effective January 1, 2026. When this increase was first announced, my first reaction was one of concern. I imagined the sentiment across the equities market, especially in a period when geopolitical tensions between Nigeria and the United States had already unsettled trading patterns. Investors were recalibrating portfolios, many shifting stance on the back of diplomatic uncertainty and the impending tax change. It did not surprise me when the Honourable Minister of Finance and Coordinator Minister of the Economy, Mr. Wale Edun, stepped forward earlier this month to say that government was reviewing the controversial tax ahead of its implementation. I saw that as a signal that policymakers recognised the temperature in the market.
In trying to make sense of this reform, I kept returning to the fact that CGT is not an arbitrary levy. It is charged on profits made from the disposal of shares and equity instruments. In simple terms, if you profit from rising share prices, you are expected to contribute something back to public revenue. That principle is not unreasonable. My concern has never been with the idea of CGT, but with how sharply and how quickly the rate was raised. A jump from 10 percent to 30 percent is not a small adjustment. It is a complete redesign of investor expectations.
When I heard analysts say the reform will now force investors to become more meticulous with record-keeping, the timing of sales, and asset diversification, I understood their point. Mustapha from CSL Stockbrokers put it candidly when he said people will begin to invest across more asset classes so they can spread whatever taxes they have to pay. That is the kind of behavioural response any government should anticipate before designing reforms. Tax decisions trigger strategy decisions, and strategy decisions affect market confidence.
Oyedele’s comment that the corporate income tax rate, currently at 30 percent, is also expected to fall to 25 percent next year added another layer to my reflection. I found his explanation quite revealing. He said the reduction had been written into the tax review but was blocked by the governors, so his team found another route to include it with a condition that it must receive approval from the National Economic Council. They have now written to NEC, and he hopes it will be concluded either by the end of December or early 2026. Listening to him, it became clear to me that tax reform in Nigeria is not just a technical exercise. It is political negotiations, institutional pushback, and bureaucratic hurdles all woven into one. Yet the outcome affects businesses directly.
The reduction of corporate income tax matters because it affects profitability. If companies retain more of their earnings, they invest more, hire more, expand more, and eventually contribute more through sustained productivity. Oyedele argued that listed companies will become more profitable as a result, and even unlisted ones will feel the impact. I agree with him. In an economy where businesses often struggle with costs, any downward movement in taxes that improves cash flow is not a cosmetic gesture. It is a structural stimulant.
What caught my attention even more was another reform hidden in the tax act. This is the treatment of input VAT. For so many years since VAT was introduced, Nigerian businesses could not claim input VAT credit on their assets, meaning capital investments simply became an added cost. They could not claim input VAT on services and overhead either. When I think about how many businesses have carried the burden of these unclaimed credits for years, I wonder how much capital silently leaked away from productive use. Under the new reform, businesses will now enjoy full input credit on assets, overhead, and services. To me, this is one of the most transformational provisions in the new regime.
The combined impact of the lower corporate income tax rate and the new VAT input credit system is estimated at N5.4 trillion, about 60 to 70 percent of the corporate tax revenue base. Oyedele said that when converted, it stands around $3.5 billion. I paused on those numbers, not as an economist but as someone who understands what cash flow means to a struggling firm. If businesses collectively gain a relief of this scale, there is a genuine chance that the reform will stimulate growth from within rather than impose another cycle of survival pressures.
Of course, relief is only one side of the equation. I still worry about the psychological impact of the initial shock that took CGT from 10 percent to 30 percent. Even if government eventually settles at 25 percent, the market has already absorbed the anxiety. Policies are not just numbers written into law. They are signals, and signals travel faster than legislative amendments. This is why I believe the government must manage this transition with clarity and consistency. Investors already recalibrated once. For their confidence to steady, they need to believe that government will not keep moving the goalpost.
As I weigh these developments, I find myself asking what kind of tax philosophy Nigeria wants to embrace. If the goal is to broaden the tax net while ensuring fairness, then reforms must be designed with an understanding of real-world market behaviour. If the goal is to raise revenue without stifling investment, then the sequencing of tax changes must be gradual and predictable. What I see in the current reform package is an attempt to correct earlier missteps, to realign the rates, and to soften the impact on businesses. That effort should continue.
My hope is that by the time NEC gives its approval, companies will see a clearer path forward. My hope is that by the time 2026 arrives, investors will not be operating with suspicion, but with an understanding of how their gains and decisions fit into the national revenue framework. Above all, my hope is that these reforms will force the government to adopt a long-term view. Nigeria cannot grow on the back of short-term fiscal improvisation. It can grow only on the back of stable rules and consistent policy signals.
If there is any lesson from everything Oyedele and Edun have said in recent weeks, it is that tax policy sits at the heart of business sentiment. People invest when they trust the environment. They expand when they understand the obligations ahead. And they innovate when government gives them space to grow. Whether the CGT ends at 25 percent or whether further reviews become necessary, what matters to me is that Nigeria treats tax reform as a living system, not an isolated announcement.
