Capital Gains Tax (CGT) is a tax on the profit obtained from disposal or exchange of certain kinds of assets. In Nigeria, CGT is charged at a flat rate of 10% of chargeable gains. It is governed by Capital Gains Tax Act, Cap C1 LFN 2004 (as amended). All chargeable assets are subject to Capital Gains Tax when disposed at a gain, except those specifically exempted by the Act.
Here are the tax incentives on CGT in Nigeria including the relevant incentives in the Finance Act, 2019:
|Capital Gains Tax|
|Exemptions/Incentives S26 – S30, S32- S 40||Exempted gains||Gains exempted from CGT are disposal of: Shares and stocks.Nigerian government securities.Life assurance policies. Main residence or dwelling house of an individual. Compensation for wrong or injuries suffered by an individual.Decorations awarded for velour or gallant conduct.|
|Allowances S14 and Reliefs S32||Deductions||Deductions Initial cost of the assetStamp duties Cost of enhancing the value of the assetExpenditure incurred in establishing, preserving or defending the title to, or right over the asset Incidental expenses for the purpose of acquiring or disposing of the assets; and Cost of advertisement to find a seller during acquisition and advertisement cost to find a buyer during disposal. Rollover relief: This can be claimed where proceeds of disposal are used to purchase a new asset of the same class within 12 months before or after the disposal of the old asset. The classes of the assets eligible for relief are: Class 1: – 1A: (i) Building (ii) Land – 1B: Plant or machinery which does not form part of the building Class 2 – Ships Class 3 – Aircraft Class4 – Goodwill.|
|Capital Gains Tax Act (F.A)|
|1.||Section 49 of Finance Act, 2019 amends S32 of CGTA||Exemption of Tax arising from Takeovers||Related Party business reorganization can be completed without CGT implications subject to if the minimum holding requirement of 365days is met.|