Nigeria’s proposed Capital Gains Tax (CGT) on equity investments has unsettled investors, raising fears of capital flight and short-term volatility on the Nigerian Exchange (NGX).

The plan introduces a 25% tax on profits from the sale of shares when proceeds are reinvested into fixed-income or non-equity assets. However, gains reinvested into another Nigerian company would be exempt.

Analysts warn the policy could discourage foreign participation and trigger sell-offs before its January 2026 rollout. Concerns also persist over possible retroactive taxation and the use of outdated acquisition costs that could inflate liabilities.

Government officials argue the reform aims to broaden the tax base and could generate up to ₦1 trillion annually. To protect smaller investors, the proposal includes a ₦150 million annual exemption, expected to shield 99.9% of retail traders.

Despite this, market operators have urged the government to cut the rate and align with global standards, warning that high taxation could raise the cost of equity financing and reduce market appeal.

As consultations continue, investors are watching closely balancing the promise of fiscal reform against the risks of market disruption.