How new tax laws will spur investments – Uwaleke

Uche Uwaleke, A Professor of Capital Markets and Director of the Institute of Capital Market Studies at Nasarawa State University, has said Nigeria’s ongoing tax reforms are designed to stimulate investment, particularly in the capital market, while blocking revenue leakages in the economy.

 

Speaking at the BusinessDay 2026 Tax Conference in Abuja on Thursday, Uwaleke explained that recent adjustments to the capital gains tax (CGT) framework were structured to encourage investors to retain and reinvest their funds within Nigeria rather than move them abroad.

 

According to him, although capital gains tax has increased from 10 per cent to 30 per cent, the new law provides incentives that protect investors who reinvest their proceeds in the Nigerian capital market.

 

He noted that investors who dispose of shares valued above $150 million and record gains exceeding $10 million would ordinarily be required to pay the 30 per cent CGT.

 

However, such investors would be completely exempted from the tax if the proceeds are reinvested in the Nigerian capital market.

 

Uwaleke said the provision was deliberately introduced to discourage capital flight and strengthen domestic investment.

 

“The idea is to ensure that funds realised from investments remain within the Nigerian capital market. If the proceeds are reinvested locally, the investor is exempted from paying the capital gains tax,” he said.

 

He also explained that the reforms allow investors to offset losses incurred from some share transactions against gains made from others before calculating their tax obligations.

 

For instance, he said an investor who records a $20 million gain from selling shares in a company but incurs an $11 million loss from another stock transaction can deduct the loss from the gain.

 

According to him, such adjustments could bring the net gain below the taxable threshold of $10 million, meaning the investor would not pay any capital gains tax.

 

He added that the reform also allows recovery of input costs for items classified under zero-rated categories, including basic food, healthcare, and education services.

 

“These provisions are meant to encourage investment and ensure investors are able to recover their inputs where applicable,” he said.

 

Uwaleke, who served on the Presidential Fiscal Policy and Tax Reforms Committee, said the reforms were not limited to taxation alone but also addressed government spending and public debt management as part of a broader fiscal policy framework.

 

He explained that while the value-added tax rate remains at 7.5 per cent, government revenues are expected to rise as a result of improved efficiency and efforts to block leakages in the tax system.

 

According to him, widening the tax base and bringing previously untaxed sectors, such as digital services, into the tax net would also contribute to higher revenue generation.

 

He cited abuses within free trade zones as an example of revenue leakages the new tax framework aims to address.

 

“Free trade zones were designed for companies that produce for export, but some firms produce there and sell in the domestic market while still enjoying tax exemptions, giving them an unfair advantage over companies operating outside the zones,” he said.

 

Uwaleke stressed that as revenues improve, public discourse should shift towards ensuring that increased government income translates into better public spending and improved social services.

 

“The next phase of advocacy should focus on how increased revenues will translate into quality spending that improves the welfare of Nigerians,” he said.

 

He added that fiscal policy should not be viewed solely through the lens of taxation but should also include responsible spending, budget reforms, and effective public debt management.