With a few weeks to the January 1 rollout of the 2025 Nigeria Tax Act, there is growing concern among the nation’s business community, industry experts, and other stakeholders that the new tax regime could trigger unprecedented capital flight and undermine Nigeria’s investment climate.
The Act, signed into law in June 2025, introduces sweeping changes to Nigeria’s fiscal framework in decades, including increase in the Capital Gains Tax (CGT) for companies from 10% to 30%; a new 4% development levy on profits; a 15% Minimum Effective Tax Rate , ETR, for large multinationals, and a fundamental revision of tax exemptions for Free Trade Zones , FTZs.
The Chairman, Alliance for Economic Research and Ethics LTD/GTE and Chairman, Nigeria Turkiye Business Council, Dele Kelvin Oye, who raised the concern I a statement yesterday, noted that the tax reforms represented the most significant overhaul of the nation’s fiscal landscape in a generation.
He said the new system threatened to cripple the very investment and business growth Nigeria desperately needed to secure its long-term economic future.
Oye, who is also the Life Vice-President & 22nd National President, NACCIMA, while describing the tripling of CGT by 200 per cent as the most explosive provision of the Act, said the new rate drastically reduced potential returns, making Nigeria significantly less attractive than regional competitors.
He said: “Nigeria stands at a critical juncture. Faced with volatile oil revenues, mounting debt service obligations, and the pressing need to fund national development, the government has turned to comprehensive fiscal reform as a primary tool for economic stabilisation.
“The culmination of this effort is the Nigeria Tax Act, 2025, a landmark piece of legislation that consolidates over a dozen previous tax laws into a single, sweeping statute. Its architects present it as a bold step towards creating a more efficient, transparent, and equitable tax system that can broaden the nation’s revenue base and reduce its historic dependence on the petroleum sector.
“The explicit goals are laudable: to streamline administration, curb tax evasion, and ensure all sectors of the economy contribute their fair share to national progress.
“However, policy, particularly fiscal policy, is judged not by its intentions but by its outcomes. As the January 1, 2026, implementation date approaches, a wave of apprehension is palpable across the Nigerian and international business communities.
‘’The Act’s core tenets, particularly the dramatic hike in Capital Gains Tax from 10% to 30%, the imposition of a new 4% Development Levy, and the ambiguous overhaul of the Free Trade Zone incentive regime, have been met with significant concern.
‘’These measures, while designed to fill government coffers, are perceived by many as direct assaults on profitability, capital formation, and investment incentives. They raise fundamental questions about Nigeria’s strategic direction, forcing a crucial debate between Taxation for Revenue vs. Taxation for Growth.
“Is the nation building a foundation for long-term, private sector-led growth, or is it erecting fiscal barriers that will stifle innovation and drive capital to more hospitable shores? This analysis seeks to move beyond the headlines to provide a deep, evidence-based examination of the 2025 Tax Act.
“We will deconstruct its key provisions, critically evaluate its likely negative and positive impacts, and situate Nigeria’s new fiscal posture within the dynamic context of regional competition. As nations such as Ghana, Ethiopia, and Rwanda aggressively reform their economies to attract investment and leverage the African Continental Free Trade Area, AfCFTA, Nigeria’s choices carry profound implications.
“This paper argues that while fiscal consolidation is necessary, the current architecture of the Tax Act risks prioritising short-term revenue generation at the expense of the long-term investment and competitiveness that are the true engines of sustainable development.”
Oye, who is also the immediate past Chairman of the Organized Private Sector of Nigeria, added, “Ultimately, we will propose a series of actionable policy recommendations aimed at recalibrating the Act to promote a symbiotic relationship between government revenue and private enterprise, ensuring that Nigeria remains not just open for business, but a magnet for transformative investment.
“The 2025 Tax Act emerges from a complex history of repealed statutes and new frameworks. To understand its impact, one must first dissect its most significant components. Perhaps the most contentious provision is the increase of the CGT rate for companies from a relatively competitive 10% to 30%, aligning it with the Companies Income Tax, CIT, rate.
‘’This tax applies to profits realised from the sale of capital assets, including stocks, real estate, and intellectual property. The government’s rationale is twofold: to generate substantial revenue from asset transactions in a growing economy and to create parity between income from operations (taxed at 30%) and income from capital appreciation. For individuals, capital gains will now be taxed at their applicable progressive income tax rates, reaching up to 25%.
“The Act introduces a new 4% Development Levy calculated on the assessable profits of all companies operating in Nigeria. This levy replaces and consolidates several existing taxes, including the Tertiary Education Tax and the National Information Technology Development Levy.
‘’The stated goal is to simplify the tax structure, reducing the administrative burden on businesses of complying with multiple, smaller levies. The revenue generated is intended to be a dedicated funding stream for national development projects, thereby directly linking corporate profitability to public infrastructure and social services.’’
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