Nigeria’s 30% Capital Gains Tax Rewrites the Rules for Foreign Company Deals

A foreign company can now become the route through which Nigeria taxes gains linked to assets in the country, even when the transaction itself takes place thousands of kilometres away.

This follows the Nigeria Tax Act 2025, which took effect on January 1, 2026 and raised the corporate Capital Gains Tax (CGT) rate to 30 per cent, bringing it in line with the corporate income tax rate. The law also introduced provisions for taxing specified indirect transfers involving foreign entities.

PricewaterhouseCoopers (PwC) Nigeria examined the implications in its report, “Nigeria’s Capital Gains Tax reforms: What the new 30% rate and indirect transfer rules mean for investors,” with particular attention to private equity funds, multinational companies and cross-border investors.

A sale in London, Dubai, Amsterdam or Johannesburg could attract Nigerian CGT where the foreign company derives more than 50 per cent of its value, directly or indirectly, from Nigerian assets.

Section 17(2) of the Nigeria Tax Act provides that gains earned by a non-resident from the disposal of chargeable assets are taxable in Nigeria where the asset is located, or deemed to be located, in Nigeria.

Under Section 46(f), shares or similar interests in a foreign entity are treated as located in Nigeria if, at any time during the 365 days preceding their disposal, more than 50 per cent of their value is derived, directly or indirectly, from Nigerian assets.

Section 47 provides another basis for taxation, stating that gains from a non-resident’s disposal of shares are chargeable where the transaction changes the ownership structure of a Nigerian company or the ownership of an asset located in Nigeria.

The position differs sharply from what was obtainable previously, under which gains from share disposals were generally exempt. Direct disposals of shares in Nigerian companies became subject to CGT at 10 per cent from 2022, subject to specified exemptions.

PwC has identified an important question over how the 50 per cent threshold interacts with the change-of-ownership provision.

One interpretation is that the threshold must be met before CGT can arise. Another is that the change-of-ownership provision operates independently and can create a tax charge without the threshold being satisfied.

The narrower interpretation would favour taxpayers, although PwC said there is a strong argument that the change-of-ownership provision was deliberately designed as an independent charging rule.

Nigeria’s 30 per cent rate is higher than the comparable rates cited by PwC for South Africa at 21.60 per cent, Morocco at 20 per cent, Kenya at 15 per cent and Ghana at 25 per cent.

The scope of the Nigerian rules is also significant. Many jurisdictions confine indirect transfer provisions largely to interests deriving value from mineral assets or immovable property. Nigeria has paired a 30 per cent CGT rate with indirect transfer provisions.

For investors, that puts tax due diligence, valuation and exit planning firmly within the transaction process. PwC advised private equity funds, multinational companies and cross-border investors to examine the Nigerian assets underpinning a foreign company before completing a deal and account for possible CGT liabilities when structuring transactions and setting completion timelines.

Several technical matters remain open, including whether capital gains will form part of profits subject to the Development Levy, the treatment of capital losses, the interaction between trading losses and capital gains, filing requirements where a disposal produces a capital loss, share identification rules and valuation guidance.

PwC also questioned whether a step-up in cost basis will apply to investments acquired before 2026.

Currency depreciation presents another issue. A foreign investor could record a gain in naira terms while suffering a real loss in dollar terms. PwC has flagged the possible taxation of such nominal naira gains for further consideration.

The consultancy has separately asked the Nigeria Revenue Service (NRS) to clarify the implementation of new tax rules covering digital asset transactions.

Its requests include a formal commencement notice, approved price aggregators, a list of supported tokens and a clear process for crediting the one per cent withholding tax deducted against taxpayers’ final income tax liabilities.

PwC also wants guidance on the N10 million stamp-duty threshold, transfers between corporate-owned wallets, unsupported tokens, refunds and the respective collection responsibilities of federal and state tax authorities.

It has proposed a joint implementation protocol between the NRS and the Securities and Exchange Commission (SEC) to align tax reporting, licensing, anti-money laundering controls and investor-protection obligations.

Virtual Asset Service Providers (VASPs) have been advised to conduct legal-gap and systems-readiness assessments before activating tax deductions. Taxpayers should also obtain Tax Identification Numbers, adopt a consistent cost-base methodology and retain wallet records, exchange-rate information and transaction evidence for at least six years.

PwC described the framework as a workable baseline but said material legal and implementation gaps still require clarification to provide certainty and consistency for taxpayers and investors.

The wider tax regime also offers potential benefits, including more input VAT claims, the economic development incentive, exemptions for smaller investors and reinvestment relief.

For businesses involved in cross-border transactions, the central issue is no longer simply where a deal is signed. Where the value sits, how ownership is arranged and whether control of Nigerian assets changes hands can determine whether Nigeria has a claim on the resulting gain.