As part of its broader fiscal reform agenda, the federal government has introduced several tax and policy changes aimed at deepening Nigeria’s capital market and attracting new investment.
The overarching goal is to reduce the cost of doing business, simplify compliance, and make the financial ecosystem more efficient and investor-friendly.
According to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, the new reforms are designed to achieve several critical objectives: harmonise Nigeria’s complex tax structure, position the country as an attractive hub for digital nomads and business outsourcing, encourage the formalisation of informal businesses by reducing their tax burden, increase tax collection efficiency, and promote a more transparent, fair, and competitive economic environment.
Here are the 14 key changes made to support the capital market:
1. Elimination of withholding tax (WHT) on bonus shares
The government has removed withholding tax (WHT) on bonus shares, a move widely welcomed by investors.
Bonus shares are issued to reward shareholders by capitalising reserves, not as a distribution of new income; taxing them previously discouraged long-term equity holding. this exemption signals a clear policy shift toward supporting wealth creation through the capital market and encouraging investors to hold their positions.
2. Easier business restructuring through tax exemptions
mergers, acquisitions, and corporate reorganisations will now enjoy specific tax exemptions. By removing taxes on internal restructuring, companies can consolidate, scale, and strengthen balance sheets without facing immediate tax penalties.
This policy is expected to stimulate merger activity, improve operational efficiency, and better position local firms to compete effectively in regional and global markets.
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3. Level playing field for listed and unlisted companies
Historically, entities listed on the exchange often faced stricter compliance requirements compared to unlisted firms, which served as a disincentive for private companies to go public.
The new reform aims to bridge that gap, ensuring fair and consistent tax treatment across both categories. This balance could significantly boost listings on the Nigerian exchange (NGX) and deepen capital formation within the formal sector.
4. Stamp duty exemption on share transfers
Documents relating to the transfer of stocks and shares are now exempt from stamp duty. This is a practical relief that directly reduces transaction costs for investors and brokers, thereby making share trading more efficient.
By lowering these frictional costs, the government hopes to encourage more trading activity and liquidity in the market.
5. Reduced taxes on productive investments
investors will now be able to claim input Value Added Tax (vat) credits on capital assets. this is significant because it lowers the effective cost of new investment in machinery, equipment, and expansion.
The measure recognises that productive investment should be encouraged and not taxed at multiple stages of the value chain.
6. Planned cut in Companies’ Income Tax (CIT) from 30% to 25%
Reducing the corporate tax burden by cutting the Companies’ Income Tax (CIT) rate from 30 percent to a target of 25 percent represents a strong pro-business signal.
A lower CIT rate allows businesses to reinvest more of their profits into operations, wages, and expansion. Over time, this could boost corporate profitability, stimulate hiring, and make Nigeria more competitive against regional peers like Ghana and Kenya.
7. Harmonisation of earmarked levies
Levies such as the Tertiary Education trust fund (TETFUND), national information technology development agency (NITDA), and national agency for science and engineering infrastructure (NaSENI) contributions have long been sources of compliance complexity and multiple taxation.
Their harmonisation will simplify reporting obligations and significantly reduce administrative costs for companies, allowing management to focus more on productivity and less on paperwork.
8. Repeal and streamlining of over 60 taxes to fewer than 10
Nigeria’s tax system has often been criticised for its difficulty, with over 60 overlapping taxes and levies imposed at federal, state, and local levels.
The reform seeks to merge these into fewer than ten, a massive simplification that could greatly improve Nigeria’s “ease of paying taxes” ranking and attract new business investments.
9. Tackling the proliferation of agency levies
regulatory agencies like the Financial Reporting Council of Nigeria (FRCN) and others have, in recent years, introduced extra levies beyond statutory taxes. The government now plans to curb such duplication through stricter oversight.
This ensures companies are not subjected to different charges on the same income by multiple agencies, thereby improving fairness and predictability in the business environment.
10. Removal of minimum tax on turnover or capital
The elimination of minimum tax on company turnover or capital is another welcome move. Previously, firms were required to pay a minimum tax even when unprofitable, a rule that disproportionately affected startups and struggling businesses.
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Removing this requirement gives breathing space to companies still finding their footing, helping them to recover and reinvest.
11. CGT exemptions for reits and securities lending
Capital Gains Tax (CGT) exemptions for Real Estate Investment Trusts (REITs) and securities lending are designed to boost market sophistication and liquidity.
These instruments are fundamental to a modern financial system.
By exempting them from CGT, the government signals explicit support for institutional investment and long-term market development.
12. State government bonds and fixed income incentives
Income from state government bonds will now be tax-exempt, encouraging more local participation in sub-national financing. Similarly, fixed-income investors will benefit from personal income tax exemptions or final withholding tax treatment, this ensures that investment in government-backed securities remains attractive and competitive.
13. Reliefs for foreign investors
To attract more foreign capital, the government is proposing lower WHT rates on dividends and interest income and a review of Tax Identification Number (TIN) requirements. These measures are intended to reduce administrative barriers, making Nigeria a more accessible and investor-friendly market for global funds.
14. Reduced tax burden for small businesses
The reform will significantly reduce the compliance burden for Small and Medium-Sized Enterprises (SMEs) by raising the tax registration threshold. This move is aimed at increasing the formalisation of businesses and boosting the overall size of the formal economy.
