Nigeria capital gains tax uncertainty concerns offshore investors

Foreign investors in Nigeria are expressing growing concern over the implementation and lack of clarity regarding the country’s capital gains tax. While sentiment toward Nigeria’s broader economic reforms has improved compared to 2023, the recent tripling of the capital gains tax from 10 percent to 30 percent has created significant uncertainty.

Cordros Securities reports that offshore fund managers have raised issues regarding the opacity of the tax administration and a lack of communication since the policy became effective. This uncertainty contributed to the stock market experiencing its largest losses since 2010 in November. Despite a market recovery of nearly 60 percent year-to-date, many foreign funds remain net sellers of Nigerian equities as they weigh the tax impact and the long-term sustainability of current reforms beyond the present administration.