FG moves to shield low-income earners, boost disposable income and deepen capital market participation
The Federal Government has clarified that small-scale investors in Nigeria’s capital market will not be required to pay capital gains tax, as part of sweeping changes under the 2026 tax reform law aimed at protecting low-income earners and increasing disposable income.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, made this known while addressing participants at the Cowry Quarterly Economic Discourse, themed “Nigeria in 2026: Will Politics Trump Economic Reform?”.
Oyedele said concerns surrounding capital gains taxation were largely driven by misinformation, stressing that the new law provides automatic exemptions for most individual investors.
According to him, any individual whose total proceeds from the disposal of assets do not exceed ₦150 million, and whose gains are not more than ₦10 million within a 12-month period, is fully exempt from capital gains tax—without conditions.
“The law is clear: everyone is entitled to capital gains tax exemption. If your proceeds are below ₦150 million and your gain is not more than ₦10 million in a year, the exemption applies automatically. No explanation is required,” Oyedele said.
He added that pension fund administrators and real estate investment trusts (REITs) are also exempt, provided sale proceeds are reinvested within the market.
According to Oyedele, capital gains tax only applies to high-net-worth individuals who permanently exit investments without reinvesting.
“If a multi-billionaire sells shares worth ₦2 billion and chooses not to reinvest, then tax becomes payable. But if the money is reinvested, the law allows full exemption. What applies instead is a small transaction cost, which actually encourages more market activity,” he explained.
Oyedele described Nigeria’s capital gains tax framework as one of the most competitive globally, noting that it is designed to encourage liquidity, reinvestment and long-term market growth.
He assured investors that the committee is working on implementation regulations to eliminate grey areas, adding that any changes requiring amendments to the law would be submitted to President Bola Tinubu for consideration.
Youth Investors Largely Exempt
The tax reform chairman also addressed concerns about taxation of digital and virtual asset investments, noting that most young Nigerians operate at very small investment levels.
“These young people are not investing millions of dollars. They are investing $50, $80, sometimes $200. That is what adds up. Capital market investments, on the other hand, often give better returns even in dollar terms and they are fully exempt,” he said.
Oyedele warned that widespread misinformation has discouraged youth participation in the stock market, with many wrongly believing that investment returns attract taxes as high as 30 per cent.
“If you ask young people on the street, they will tell you the stock market is taxed at 30 per cent. That belief exists because nobody is telling them they are actually exempt,” he said.
Ending the Taxation of Poverty
Speaking on the broader objectives of the 2026 tax reform, Oyedele said the law is designed to end the taxation of poverty, protect low-income earners and ensure that those with greater financial capacity contribute a fairer share of taxes.
Under the new framework, Nigerians earning the national minimum wage are fully exempt from personal income tax. The threshold for taxable income has also been significantly increased after accounting for allowable deductions and reliefs.
“The ₦800,000 figure people talk about is taxable income, not gross income. After deductions and allowances, that translates to roughly ₦1 million to ₦1.2 million in gross income. Even at that level, minimum wage earners pay no tax at all,” he explained.
Oyedele recalled data previously presented to the Federal Government showing that about 96 per cent of personal income tax revenue in Nigeria came from low-income earners, a situation he described as both unfair and economically risky.
“We were taxing poverty, and that is not how a functional economy works,” he said.
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