Presidency clarifies tax reform benefits over misconceptions

Abdullateef Fowewe

The Special Adviser to President Tinubu on Economic Affairs, Tope Kolade Fasua, has provided a detailed explanation debunking widespread misunderstandings regarding Nigeria’s recent tax reforms.

In a comprehensive statement titled “Tax Reforms Gains: Debunking the misconceptions (2),” Fasua emphasised how the reforms enhance fiscal transparency and investment climate rather than hinder it.

Fasua highlighted that the newly defined “Covered Taxes” under the 15% Effective Tax Rate include income tax, petroleum profits tax, hydrocarbon tax, development levy, and priority sector tax credits.

This broad approach “ensures that companies are given credit for the full range of their fiscal contributions, preventing double taxation.”

He added that this new rate is “not a deterrent to investment but a mechanism for fiscal sovereignty and fair competition,” sending a strong signal that “Nigeria provides a transparent, rules-based system.”

On capital gains taxation, now referred to as “chargeable gains” under the Nigerian Taxation Act (NTA), Fasua explained the shift from the outdated 1967 Capital Gains Tax Act.

The new system integrates capital gains into company profits taxed at 30% or individuals’ income, which is taxed between 0 to 25%.

“While the rate appears higher, the exemptions, reliefs, and structural flexibilities introduced make the new system significantly more favourable for active investors,” he added.

One key reform is the reinvestment relief allowing gains from shares to be reinvested in Nigerian companies without triggering tax, provided reinvestment occurs within the same year.

Fasua noted, “This provision allows investors to rotate capital without tax friction,” fostering portfolio fluidity and capital formation.

The NTA also improves how losses are treated by allowing capital losses to reduce taxable income.

This “pro-innovation policy stance is highly attractive to Venture Capital and Private Equity,” absorbing some risks investors face.

Additionally, smaller transactions benefit from specific monetary thresholds exempting gains below N150 million in proceeds and N10 million in chargeable gains from taxation.

This protects retail investors and startups, “fostering a vibrant secondary market for securities.”

Fasua concluded, “Nigeria is not raising tax barriers; it is creating a stronger foundation for a modern, competitive economy. Investors, domestic and foreign, should see these reforms as a signal that Nigeria is serious about building a predictable, stable, investment-friendly environment and is open for business.”