The federal government has scrapped the capital gains tax of 10 per cent and merged it with the corporate income tax (CIT).
The FG decided to take this step because the establishment of the Nigerian Tax Act (NTA) repeals the Capital Gains Tax Act.
On June 4, 2024, Taiwo Oyedele, the chairman of the presidential committee on fiscal policy and tax reforms, said it would propose a CIT reduction of 5 per cent.
According to Oyedele, such move would reduce the tax rate from 30 per cent to 25 per cent to encourage businesses and investors across Nigeria.
A report also emerged in October 2024 claiming that the National Assembly was considering a bill that would cut the CIT to 27.5 per cent in 2025, bringing it down from 30 per cent and another reduction to 25 per cent by 2026.
The FG has retained the CIT whose framework is contained in the new provisions of the NTA which will take effect as from January 2026, keeping it at a flat rate of 30 per cent for all companies, excluding small businesses.
Also according to the new law, the tax rate for small companies (those with a gross turnover of N50 million or less per annum with total fixed assets not exceeding N250 million) has been kept at zero per cent.
“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of a small company, at 0%; and (b) any other company, at the rate of 30 percent from the commencement of this Act,” the document read.
The Act said under the law, businesses providing professional services are not classified as small companies, explaining that ‘professional services’ refer to services provided by an individual or a firm having specialised knowledge, skills, and qualifications in specific fields, “including consulting, planning, or support services, excluding artisans or vocational services”.
“Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15%, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15%,” the Act added.
“The provisions of this section shall apply to a company that is a constituent entity of an MNE group, and (b) any other company with an aggregate turnover of N20,000,000,000 and above in the relevant year of assessment.”
