Operators in Nigeria's capital market have called on the Presidential Committee on Fiscal Policy and Tax Reforms (FPTR) to reconsider the proposed 30% capital gains tax (CGT) on share disposals, warning that the policy could harm investor confidence and limit funding opportunities for businesses, including SMEs.
In an open letter to FPTR Chairman Taiwo Oyedele, the operators argued that the new tax regime, set to take effect in January 2026, would place undue pressure on the Nigerian Exchange (NGX) as both domestic and foreign institutional investors rush to take profits under the current rules.
They noted that while retail investors enjoy an annual exemption threshold of N150 million, institutional investors—including pension funds and foreign portfolio investors—are excluded, creating what they described as an "uneven playing field." This, they warned, could drive away foreign capital and increase the cost of equity financing for Nigerian companies, especially smaller firms seeking to raise funds.
"The proposed policy risks making Nigeria less competitive as an investment destination," the letter read, stressing that higher taxes and FX risks could discourage foreign participation and reduce liquidity in the market.
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Market data shows strong performance in 2025, with the NGX market capitalisation rising 44.3% to close at N90.58 trillion by September, buoyed by forex reforms, investor confidence, and banking sector recapitalisation. Analysts caution, however, that the introduction of a steep CGT could reverse these gains and undermine the ability of SMEs to access affordable funding.
Chief Executive of Emerging and Frontier Capital, Kato Mukuru, suggested that the government consider fairer alternatives, such as exemptions or phased implementation, noting that the long-term interest of the market lies in policies that encourage capital inflows rather than restrict them.
Analysts further warned that the move could raise financing costs for Nigerian businesses, as investors demand higher returns to offset the tax burden. This, they said, would disproportionately affect SMEs that rely on capital market instruments and investor confidence to scale operations, create jobs, and contribute to economic growth.
