RE-INTRODUCTION OF CAPITAL GAINS TAX IN THE
NIGERIAN CAPITAL MARKET
BY
Dr. S. B. Adeyemi,
Department of Accounting,
Faculty of Business Administration,
University of Lagos
and
M. T. Babington-Ashaye
Chairman,
Ogun State Board of Internal Revenue,
Abeokuta
Ogun State
I.
INTRODUCTION
Taxation is a compulsory levy imposed by the Government on the incomes of taxpayers
in a geographical territory in order to defray the expenses of governance. This implies
that anybody that generates income must compulsorily pay taxes. There are different
types of taxation. These include the personal income tax, companies income tax,
petroleum profit tax, value added tax and the capital gains tax. Recently, the issue of
capital gains tax in the Nigerian capital market has come to the fore. Government, from
time to time, has the responsibility of reviewing the tax position as a component of the
subsisting fiscal policy for the purpose of meeting given objectives. However, each
review naturally elicits mixed reactions from the stakeholders. Every school of thought
argues from its narrow position and prays for government policy on tax to suit its interest.
It is the purpose of this paper to examine the various arguments for and against the
reintroduction of capital gains tax in the Nigerian capital market, and proffer suggestions
for appropriate policy initiatives.
The paper is structured as follows: section II presents the nature of CGT. Section III
examines the position of the opponents of CGT regime in the capital market in Nigeria.
The argument for CGT is summarized in section IV. A discussion of the various
positions is made in section V. Section VI summarises, concludes and recommends a
policy position regarding the reintroduction of CGT for stocks and shares in Nigeria.
II.
THE NATURE OF CAPITAL GAINS TAX
Capital Gains Tax is a form of tax chargeable on capital gains arising from the disposal of
chargeable assets. CGT was introduced in Nigeria through the Capital Gains Tax Ac