With the January 1, 2025 implementation date for the new Nigeria Tax Act approaching rapidly, serious concerns are mounting across the nation's business landscape. Experts and stakeholders fear the sweeping fiscal reforms could spark unprecedented capital flight and severely damage Nigeria's attractiveness to investors.
Radical Tax Overhaul Sparks Alarm
The 2025 Nigeria Tax Act, which was signed into law in June 2025, represents the most significant transformation of Nigeria's fiscal framework in decades. The legislation introduces dramatic changes including a tripling of the Capital Gains Tax (CGT) for companies from 10 percent to 30 percent. Additionally, it imposes a new 4 percent Development Levy on profits, establishes a 15 percent Minimum Effective Tax Rate for large multinational corporations, and fundamentally revises tax exemptions for Free Trade Zones (FTZs).
Dele Kelvin Oye, Chairman of the Alliance for Economic Research and Ethics LTD/GTE and Chairman of the Nigeria Turkiye Business Council, has emerged as a leading voice expressing deep concerns. He describes these tax reforms as the most substantial overhaul of the nation's fiscal landscape in a generation, but warns they threaten to cripple the very investment and business growth that Nigeria desperately needs for long-term economic security.
Investment Climate Under Threat
Oye, who also serves as Life Vice-President & 22nd National President of NACCIMA and immediate past Chairman of the Organised Private Sector of Nigeria, identifies the 200 percent increase in Capital Gains Tax as the most explosive provision of the entire act. He emphasizes that this drastic rate hike significantly reduces potential returns for investors, making Nigeria considerably less competitive compared to regional counterparts.
"Nigeria stands at a critical juncture," Oye stated. "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."
Proposed Policy Recalibration
To address these concerns, Oye has proposed several strategic adjustments to mitigate negative impacts while harnessing potential positives from the 2025 Tax Act. His recommendations aim to create a symbiotic relationship between government revenue generation and private enterprise vitality.
Regarding the Capital Gains Tax, Oye suggests immediate reconsideration of the 30 percent rate. He proposes a more moderate, phased increase—potentially to 15 percent initially—with future reviews based on empirical data about its actual impact on investment flows. This approach would provide greater prudence and flexibility.
For the 4 percent Development Levy, Oye recommends implementing a tiered system with lower rates for Small and Medium Enterprises (SMEs) and export-oriented industries. This would reduce the levy's drag on growth sectors that are crucial for economic expansion.
Concerning Free Trade Zone exemptions, rather than blanket removal, Oye advocates developing a modern FTZ incentive framework. This could include offering reduced Company Income Tax rates (10-15 percent) for fixed periods for businesses engaged in high-value activities like advanced manufacturing, ICT development, and pharmaceuticals.
"Clarity is paramount," Oye emphasized. "A new, clear, and legislatively-backed set of rules must be communicated swiftly to restore investor confidence. Ultimately, we will propose a series of actionable policy recommendations aimed at recalibrating the Act to ensure that Nigeria remains not just open for business, but a magnet for transformative investment."
The business community awaits government response to these concerns as the January implementation deadline draws nearer, with many fearing that without adjustments, Nigeria could experience significant capital outflow and investment decline precisely when economic growth is most needed.
