Taxation of Capital Market Transactions in Nigeria Finance Act 2022.


The Nigeria Finance Act 2022 introduces several amendments that impact the taxation of capital market transactions in the country. These changes have far-reaching implications for investors, market participants and the overall functioning of Nigeria’s capital markets. In this article, we will delve into the key provisions of the Nigeria Finance Act 2022 related to capital market transactions and their implications.

Capital Gains Tax (CGT):

The Act introduces changes to the taxation of capital gains from the sale of securities. While it retains the CGT rate at 10%, it revises the determination of the cost of acquisition, allowing taxpayers to choose between the purchase price and the market value as of January 1, 2022, as the cost base.

Implication: Investors need to carefully consider their cost base when calculating capital gains tax, as it can significantly affect their tax liability.

Dividend Withholding Tax (WHT):

The Act modifies the dividend withholding tax rate on both resident and non-resident individuals. Resident individuals are now subject to a 5% WHT rate, while non-residents face a 10% rate. Additionally, the Act allows for the tax-free distribution of profits to shareholders with a minimum holding period of 365 days.

Implication: Investors, especially non-resident individuals, must consider the new dividend withholding tax rates when assessing the tax impact on their investment income.

Stamp Duty on Electronic Share Transfers:

The Act introduces a stamp duty on electronic share transfers at a rate of 0.075% of the transaction value. This applies to both listed and unlisted securities.

Implication: Market participants need to account for the stamp duty when conducting electronic share transfers, which can add to the transaction costs.

Taxation of Real Estate Investment Trusts (REITs):

The Act clarifies the tax treatment of REITs, ensuring that they are not subject to income tax on rental income and capital gains. However, unit holders in REITs are liable for income tax on their dividend income.

Implication: Investors in REITs can continue to benefit from the tax advantages they provide, making them an attractive investment option.

Taxation of Collective Investment Schemes (CIS):

The Act provides clarity on the taxation of CIS, specifying that they are exempt from income tax on their profits, provided that at least 75% of the income is distributed to unit holders.

Implication: Investors in CIS can enjoy potential tax advantages while diversifying their portfolios.

Transfer Pricing Regulations:

The Act strengthens transfer pricing regulations, particularly concerning related-party transactions involving securities. It ensures that such transactions are conducted at arm’s length.

Implication: Businesses engaged in related-party securities transactions must adhere to the Act’s transfer pricing regulations to demonstrate fair and transparent dealings.


The Nigeria Finance Act 2022 brings significant changes to the taxation of capital market transactions, impacting investors, market intermediaries and issuers alike. These changes aim to ensure fairness, transparency and compliance within the capital market ecosystem. Investors and market participants should carefully assess the implications of the Act on their specific transactions and investment strategies.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.