The Managing Director/Chief Executive Officer of Arthur Stevens Asset Management Limited, Mr Tunde Amolegbe, has stated that Nigeria’s proposed 25 per cent capital gains tax on investment profits could play a crucial role in reducing market volatility and discouraging speculative “hot money” flows, particularly from foreign investors.
Amolegbe said this on Friday at the 2026 Macroeconomic Outlook event organised by the Capital Market Correspondents Association of Nigeria in Lagos.
Under the Nigeria Tax Act, the capital gains tax rate for companies has been changed from a flat 10 per cent to a progressive income tax rate ranging from 0 per cent to 30 per cent, depending on the investor’s overall income or profit level. The top rate of 30 per cent, which applies to large corporate investors, is expected to be reduced to 25 per cent under the broader corporate tax reform.
Amolegbe argued that while the tax reform has generated concerns among market participants, its long-term implications could be structurally positive for the Nigerian capital market. “What the capital gains tax reform is doing is forcing investors, especially foreign investors, to be more strategic. When you know that selling attracts a 25 per cent tax, you will think twice about coming in just for a short-term trade. That, in itself, is not a bad thing for the Nigerian market.”
According to Amolegbe, before the proposed reform, foreign portfolio investors were able to enter and exit the Nigerian market with relative ease, often without regard for the broader impact on market stability.
“Before now, foreign investors could come in easily and exit easily without really caring about the impact on the general market,” he noted. “But once you introduce a meaningful capital gains tax, the behaviour changes. Investors have to ask themselves whether it makes sense to sell quickly or stay invested longer.”
He explained that this shift in behaviour could significantly reduce sharp market swings typically associated with sudden inflows and outflows of foreign funds.
“It reduces volatility because you are no longer attracting only portfolio investors who are here for a few months. You begin to attract investors who are willing to stay for a few years because they want to make enough returns to comfortably absorb that tax,” Amolegbe said.
He also highlighted a key provision of the reform that allows investors to avoid the capital gains tax if proceeds are reinvested, describing it as a strong incentive for capital retention within the Nigerian economy.
He argued that this dynamic ultimately supports market depth and liquidity over the long term, saying, “That money they bring here will stay here longer. It helps market stability and ensures that capital coming into Nigeria is not just transient.”
Addressing concerns that the higher tax rate could discourage foreign participation, Amolegbe dismissed the notion that quality investors would be deterred.
“There has been an argument that a 25 per cent capital gains tax will scare investors away, but I don’t fully agree with that. Serious investors are not afraid of tax; they are afraid of instability and policy inconsistency.
“If an investor believes in the fundamentals of Nigeria, paying capital gains tax is not the issue. The issue is whether the market is stable and whether policies are predictable, and this reform actually helps in that direction,” he said.
The former president of the Chartered Institute of Stockbrokers concluded that the capital gains tax reform, when viewed alongside improving foreign exchange stability and pre-election liquidity, could help reposition Nigeria’s capital market for sustainable growth ahead of the 2027 elections.
“This reform encourages discipline, longer holding periods, and better market behaviour. Over time, that is exactly what the Nigerian capital market needs to mature,” he maintained.
