The Federal Government has announced significant tax relief measures set to take effect in 2026, including reductions in both Capital Gains Tax and Corporate Income Tax rates. This development comes as part of broader fiscal reforms aimed at stimulating economic growth and improving Nigeria's investment climate.
Major Tax Rate Reductions Announced
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, confirmed the government's intention to review the controversial 30% Capital Gains Tax rate down to 25% during a speaking engagement at the Tax Matters Unplugged event organized by Stanbic IBTC on Wednesday, November 27, 2025.
According to Oyedele, the adjustment is designed to create a fairer taxation system that benefits both local and foreign investors equally. "There's a plan to reduce that to 25%, which means eventually it will be taxed at 25% for the exit. And this rule applies to everyone. So there is no distinction between your foreign investor or your local investor," he stated.
Corporate Tax Relief for Businesses
In addition to the Capital Gains Tax reduction, the government is also planning to lower the Corporate Income Tax rate from 30% to 25% by 2026. Oyedele revealed that although the CIT review had initially been written into law, it faced opposition from state governors.
"We had written the CIT review for 25 percent into the law, but the governors refused it, so we found a way to add it with a condition to get approval of the National Economic Council (NEC)," Oyedele explained. The committee has already submitted a formal request to the NEC and expects the matter to be resolved before the finalization of tax laws in December 2025 or early 2026.
Expanded VAT Input Credits
Another significant reform in the new tax legislation involves the expansion of Value Added Tax input credits. For the first time since VAT implementation in Nigeria, businesses will be able to claim input VAT on assets, overheads, and services.
This landmark change is expected to substantially reduce operating costs for companies across various sectors. Oyedele emphasized that the combination of lower corporate tax rates and full VAT input credits will provide approximately N5.4 trillion (about $3.5 billion) in relief to businesses, representing 60-70% of current corporate tax revenue.
"This is essentially a stimulant for businesses from next year that is expected to, on one hand, conserve their cash flow," Oyedele noted, highlighting how these measures will enhance profitability for both listed and unlisted companies.
The current Nigeria Tax Act 2025 had scheduled the Capital Gains Tax rate to increase from 10% to 30% effective January 1, 2026, a move that had generated concerns among investors in the equities market. The newly announced revisions aim to address these concerns while ensuring that investors who profit from market gains continue to contribute to public revenue.
These tax reforms represent the Federal Government's commitment to creating a more business-friendly environment while maintaining sustainable revenue generation for national development.
