CAPITAL GAINS TAX ACT

An Act imposes tax on gains from the disposal of assets such as property and shares in Nigeria. It applies to individuals, companies, and investors selling these assets. This helps generate government revenue while providing exemptions to encourage further investment.

What Is This Policy?

An Act imposing tax on gains arising from the disposal of assets in Nigeria, including property, shares, and other capital assets, with specific exemptions and rollover relief provisions.

Who Does It Target?

Individuals and companies disposing of capital assets Real estate investors and property vendors Companies making gains on disposal of investments FIRS as the administering tax authority

What Does It Aim to Achieve?

Tax capital gains accruing to individuals and companies from the disposal of assets, contributing to government revenue while providing specific exemptions to encourage investment.

Key Features

Scope: CGT applies to gains on disposal of all chargeable assets including land, buildings, shares, and goodwill. Gains Calculation: CGT is computed on the difference between sale proceeds and the original cost (with allowable deductions). Rate: CGT is charged at 10% on chargeable gains. Exemptions: Exemptions include gains on principal private residences, Federal Government securities, and small gains below a threshold.

Current Status

Rollout Stage: Active - FIRS administers CGT Coverage: Nationwide Beneficiaries: Government revenue; investors through specific exemptions Funding: Revenue measure

How to Access

Persons making chargeable gains must self-assess and pay CGT CGT return must be filed with FIRS within the prescribed period Companies include CGT in their annual tax returns Application method: File CGT returns with FIRS at https://www.firs.gov.ng

Important Terms

CGT on shares in Nigerian companies extended by Finance Act 2021 to qualifying share disposals Gains on government bonds are exempt Rollover relief available where proceeds are reinvested in similar qualifying assets

Official Resources

Website: https://www.firs.gov.ng Contact: Federal Inland Revenue Service (FIRS)

Legal Framework

The Capital Gains Tax Act is a principal tax statute administered by the Federal Inland Revenue Service under the FIRS (Establishment) Act 2007. It operates alongside the Companies Income Tax Act (CITA), the Personal Income Tax Act (PITA), and the Finance Acts (2019–2023 amendments). Constitutional authority derives from the Second Schedule of the 1999 Constitution (Federal Government taxation powers). The Finance Act 2021 amended CGT on shares significantly.