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Tax Implications of Tangible Asset Disposals in Nigeria

The disposal of tangible assets—whether land, buildings, machinery, vehicles, or equipment—has significant tax implications under Nigeria’s new tax regime. The Nigeria Tax Act (NTA) 2025, which took effect on 1 January 2026, fundamentally transformed how chargeable gains are computed and taxed .

Gone is the era of a standalone Capital Gains Tax (CGT) at a flat 10% rate. Under the NTA, gains from asset disposals are now integrated into the ordinary income tax framework. For companies, chargeable gains form part of total profits and are taxed at the corporate income tax rate (30%). For individuals, gains are aggregated with other income and taxed at progressive personal income tax rates of 0% to 25% .

This comprehensive guide examines the tax implications of disposing of tangible assets under the NTA 2025, covering computation rules, rates, exemptions, transition provisions, and compliance requirements for businesses and individuals.

The Pain Points: Why Asset Disposal Tax Matters Now More Than Ever

The Threefold Rate Increase for Companies

The most significant change is the sharp increase in the effective tax rate on asset disposals for companies. Under the old regime, gains were taxed at a flat 10% CGT rate. Under the NTA, chargeable gains are taxed at the 30% corporate income tax rate—a threefold increase .

Yvonne Afolabi, a transfer pricing expert, noted that “the increase in capital gains tax (CGT) from 10 percent to 30 percent makes taxable disposals and certain outright asset sales more expensive” . This has significant implications for M&A pricing, sale agreements, and post-deal structures .

No Inflation Adjustment in a High-Inflation Environment

Sections 39 and 40 of the NTA provide that chargeable gains are calculated as the difference between sales proceeds and the tax-written-down value of an asset, with no adjustment for inflation . In a high-inflation environment, this means companies could be taxed on gains that are largely nominal rather than real.

Assets acquired several years ago at much lower naira values may now be sold at higher prices that simply reflect inflation, yet the full difference would be taxed at the 30% CIT rate . Tax professionals have proposed introducing a cost indexation allowance to adjust historical asset costs for inflation when computing gains .

The Tax-Reporting Mismatch

Under the NTA framework, capital allowances previously claimed are now deducted in computing the chargeable gain, eliminating separate balancing adjustments . The tax consequence of disposal is fully captured within the gain computation itself. This means historical tax planning decisions directly affect disposal outcomes.

The Uncertainty Around Private Company Valuation

For private and unlisted companies—which represent a substantial portion of the Nigerian economy—the cost basis reset presents significant challenges. Without a transparent market mechanism, there is no straightforward method for establishing value as at the transition date . The relevant authorities have not yet produced a definitive valuation framework, creating uncertainty around issues such as:

How to value privately owned businesses with no active market for their shares
What methodology applies to high-growth startups with limited profitability
Whether minority interests or lack of marketability should attract valuation discounts

The absence of regulatory guidance creates risks of aggressive valuations, tax authority challenges, and a landscape of disputes that will take years to resolve .

When Does an Asset Disposal Occur?

Under Section 35 of the NTA, a disposal occurs on any event transferring beneficial ownership, including :

Sale, exchange, or lease of an asset
Gift or compulsory acquisition
Receipt of capital sums from insurance, destruction, or loss of an asset
Part disposal or creation of rights over assets
Deemed disposals on death, company liquidation, or migration of residence

The scope of what constitutes a disposal is therefore much wider than a simple sale transaction . It covers sums derived as compensation for loss of office or employment, received under an insurance policy for injury or damage, and received for forfeiture or surrender of a right .

How Are Chargeable Gains Computed?

The General Formula

Under the NTA, chargeable gains are computed as :

Chargeable Gain = Consideration Received – Historical Cost – Capital Allowances Previously Enjoyed – Incidental Costs

This effectively means that the Tax Written Down Value (TWDV) is now used in determining the gain . The law now ensures that capital allowances previously claimed reduce the asset’s tax base when calculating the gain.

Allowable Deductions

Such allowable deductions include :

The original acquisition cost of the asset
Capital expenditure incurred to enhance or improve the asset
Incidental costs of acquisition and disposal, such as legal fees, valuation fees, brokerage commissions, advertising costs, and stamp duties

Only expenses incurred wholly and exclusively for the acquisition, enhancement, or disposal of the asset are deductible. General or financing expenses such as interest on loans used to acquire assets are not allowable .

No More Balancing Adjustments

Previously, disposal of qualifying capital assets could give rise to either a balancing charge or a balancing allowance. Under the NTA framework, since capital allowances previously enjoyed are deducted in computing the chargeable gain, there is no separate balancing adjustment .

What Is the Tax Rate on Disposals?

For Companies

For companies, chargeable gains form part of total profits and are taxed under Companies Income Tax (CIT) at 30% . This represents a significant increase from the previous 10% CGT rate .

For Individuals

For individuals, chargeable gains form part of total income and are taxed at graduated Personal Income Tax rates of 0%–25% . The new law introduces a revised personal income tax structure, with the first ₦800,000 of total income—including chargeable gains—exempt from tax and marginal rates rising progressively to a maximum of 25% .

This means that modest gains realized by low-income individuals may fall entirely within the tax-free threshold, while larger gains earned by higher-income taxpayers may be taxed at higher marginal rates .

Exemptions and Reliefs

Principal Private Residence

Section 51 of the NTA exempts gains arising from the disposal of a dwelling house and up to one acre of adjoining land, provided the land is not used for commercial purposes .

Important restrictions: The exemption can only be enjoyed once during an individual’s lifetime . This means a taxpayer who has already claimed the relief on the sale of one qualifying residential property may not claim it again on the sale of another home .

Where a property is used partly as a dwelling and partly for business activities, the gain must be apportioned, and only the residential portion may qualify for the exemption .

Personal Chattels and Private Vehicles

Personal Chattels: Gains from the disposal of personal chattels (tangible movable property such as jewellery, artworks, household items, and collectibles) are exempt only where the total consideration does not exceed ₦5 million or three times the annual national minimum wage, whichever is higher. This represents a significant increase from the old threshold of ₦1,000 .

Private Vehicles: Section 53 of the NTA provides a specific exemption for private motor vehicles used solely for private or non-profit purposes. However, the relief is restricted to no more than two motor vehicles disposed of by an individual in a year of assessment .

Sale of Nigerian Shares

To support capital market development, gains from the disposal of shares in Nigerian companies are exempt where:

Total proceeds do not exceed ₦150 million in a 12-month period, and
Total gains do not exceed ₦10 million

This exemption primarily benefits individual investors and small portfolio disposals .

Reinvestment Relief

Where proceeds from a share disposal are reinvested within the same year of assessment in acquiring shares of the same or another Nigerian company, tax applies only proportionally to the portion of proceeds not reinvested .

Corporate Reorganisations

Qualifying mergers and restructurings can benefit from tax relief. Where two or more entities merge, the NTA treats the merger as a continuation of existing businesses rather than a cessation. Assets transferred in the merger do not give rise to chargeable gains and are deemed to move at their tax written-down value .

The distinction matters: Where a transaction is structured as a sale or transfer of a business that results in cessation, the old business is treated as having ended, and its unused tax attributes may not transfer to the acquiring entity .

Pension and Charitable Assets

Gains arising within approved pension or retirement benefit schemes are exempt. Assets held on trust for charitable, religious, or qualifying public-interest purposes are also exempt, provided they are used solely for those purposes .

Gifts and Inherited Assets

Transfers by way of gift are treated as disposals at market value, potentially triggering a chargeable gain for the donor. However, gifts to exempt entities such as registered charities benefit from exemption .

Transitional Rules: The Cost Basis Reset

One of the most critical transitional provisions in the NTA is the treatment of assets held as at 31 December 2025.

The Rebasing Principle

Assets held before commencement (1 January 2026) have their acquisition cost rebased to fair market value as at 31 December 2025 . This “clean slate” eliminates taxation on pre-reform appreciation, addressing long-standing concerns about historical gains and encouraging market participation .

How It Works

For listed securities, the transition framework is operationally manageable. Market prices are observable and can be independently verified .

Example: Consider shares originally acquired at ₦100m that traded at ₦200m on 31 December 2025. The reset base becomes ₦200m. If those shares are subsequently sold at ₦250m, only the incremental ₦50m gain arising post-reform is taxable. The ₦100m of historical appreciation remains protected .

The Challenge for Private Companies

The complexity rises sharply for private and unlisted companies. Without a transparent market mechanism, there is no straightforward method for establishing value as at the transition date . The relevant authorities have not yet produced a definitive valuation framework .

Unresolved questions include:

How should a privately owned business be valued where no active market for its shares exists?
What methodology applies to high-growth startups with limited profitability but strong commercial prospects?
Should minority interests attract valuation discounts?
Are discounts for lack of marketability or lack of control permissible?
What happens when shareholders within the same company adopt different methodologies and arrive at materially different figures?

Digital and Virtual Assets

The NTA expands the taxable base by explicitly capturing gains from disposals of digital and virtual assets, including cryptocurrencies and tokens .

Key provisions:

Cryptocurrency and token disposals now attract CGT risk
Virtual Asset Service Providers (VASPs) must withhold 1% of proceeds from taxable disposals of crypto assets, security tokens, and applicable NFTs
A 1.5% stamp duty applies to token-to-fiat and fiat-to-token transfers
Stablecoin sales are exempt from the 1% withholding tax for taxable disposals

What Taxpayers Should Do Before Disposing of Assets

Maintain Proper Documentation

Proper documentation is essential under the new framework. Individuals and companies planning to dispose of high-value assets should keep records relating to :

Acquisition costs and dates
Renovation or improvement expenses
Valuation reports
Sale agreements
Other transaction-related documents

Conduct Pre-Disposal Tax Planning

Companies face materially higher CGT exposures, so M&A pricing, sale agreements, and post-deal structures should be revisited . Factors to consider include :

The commercial rationale
Eligibility for merger relief
Tax attributes available
Regulatory requirements
The overall transaction cost

Understand the Impact of Structure

Two transactions with a similar commercial objective can produce different tax outcomes depending on whether they are structured as a merger, business transfer, or asset transfer . For corporate boards and finance teams, tax is becoming part of the decision on how a transaction is executed, rather than simply a cost calculated after the commercial terms have been agreed .

Seek Professional Guidance

Given the complexity of the new regime and the unresolved questions around private company valuation, taxpayers should seek professional guidance when structuring disposals or reinvestments to ensure compliance and minimize exposure to tax .

How Qeeva Advisory Helps with Asset Disposal Tax Planning

At Qeeva Advisory, we understand that navigating the tax implications of tangible asset disposals under the NTA 2025 can be complex. Our team of experienced professionals helps Nigerian businesses and individuals structure asset disposals efficiently, optimize tax outcomes, and ensure full compliance with the new tax laws.

Our Core Services

Advisory Services Nigeria – Our advisory professionals help you understand the tax implications of asset disposals, structure transactions efficiently, and identify available reliefs and exemptions.

Tax Strategies and Planning – We help you develop tax-efficient strategies for asset disposals, including timing considerations, restructuring options, and relief identification.

Regulatory Compliance – We ensure your asset disposals meet all filing and compliance requirements under the NTA 2025.

Bookkeeping Services – Accurate records of acquisition costs, improvements, and disposal proceeds are essential for tax compliance. Our bookkeeping services ensure your asset records are accurate and complete.

Risk Management – We help you identify and manage risks associated with asset disposals, including CGT exposure and valuation challenges.

Frequently Asked Questions

Q: What is the new CGT rate for companies in Nigeria?
A: Under the NTA 2025, chargeable gains for companies are taxed at the corporate income tax rate of 30%, up from the previous flat 10% CGT rate .

Q: What is the cost basis reset for assets held before 2026?
A: Assets held before 1 January 2026 have their acquisition cost rebased to fair market value as at 31 December 2025. Only gains arising after this date are taxable .

Q: Is the sale of a private residence taxable?
A: Section 51 of the NTA exempts gains from the disposal of a principal private residence and up to one acre of adjoining land. However, the exemption can only be claimed once during an individual’s lifetime .

Q: What is the threshold for personal chattels exemption?
A: Gains from personal chattels are exempt where total consideration does not exceed ₦5 million or three times the annual national minimum wage, whichever is higher .

Q: Are capital losses deductible?
A: The NTA does not clearly state whether capital losses are deductible. Section 27 of the NTA does not clearly state whether capital losses other than those relating to digital or virtual assets are deductible .

Q: How are private companies valued for the cost basis reset?
A: This is currently an unresolved question. The relevant authorities have not yet produced a definitive valuation framework for private and unlisted companies .

Q: Does the sale of a private vehicle attract tax?
A: Private motor vehicles used solely for non-commercial purposes are exempt, subject to a limit of two disposals per individual per year .

The Bottom Line

The NTA 2025 has fundamentally changed the tax treatment of tangible asset disposals in Nigeria. For companies, the effective tax rate on gains has risen from 10% to 30%. For individuals, gains are now taxed at progressive rates of 0% to 25%.

Key Takeaways:

Understand the New Computation: Chargeable gains are now computed as consideration received less historical cost, less capital allowances previously enjoyed, and less incidental costs . There are no separate balancing adjustments .

Know the Rates: Companies face 30% CIT on gains; individuals face progressive PIT rates of 0% to 25% .

Claim Available Exemptions: Principal private residences (once per lifetime), personal chattels up to ₦5 million, private vehicles (up to two per year), and qualifying share disposals (₦150 million/₦10 million thresholds) .

Understand the Transition Rules: Assets held before 1 January 2026 have their cost rebased to fair market value as at 31 December 2025 .

Structure Transactions Carefully: The tax outcome depends on how a transaction is structured—merger, business transfer, or asset transfer .

Maintain Proper Documentation: Acquisition costs, improvement expenses, valuation reports, and sale agreements must be properly documented .

Your job is to be prepared. Understand the new rules. Structure disposals efficiently. Claim available reliefs. Maintain proper documentation. Seek professional guidance.

With the right approach and the right partner, you can turn asset disposal tax planning from a compliance headache into a strategic advantage.

Reference Links / Sources

Bloomberg Law – New Nigeria Tax Law Redefines Capital Gains Tax for Individuals – Detailed coverage of CGT rates, thresholds, computation, exemptions, and transitional rules for individuals

BusinessDay – KPMG spots 6 gaps in new tax law – Analysis of no inflation adjustment issue and unclear treatment of capital losses

UNCTAD – Nigeria Tax Act 2025 Investment Monitor – Summary of CGT rate increase from 10% to 30% for companies and indirect transfer provisions

Lexology – Mining duties, royalties and taxes in Nigeria – Overview of CGT treatment for companies and indirect transfer rules

BusinessDay – Tax implications of selling personal assets – Comprehensive coverage of exemptions for principal residences, personal chattels, and private vehicles

Reanda International – Key Changes to CGT under NTA 2025 – Overview of expanded scope including digital assets and indirect transfers

BusinessDay – Mergers & Acquisitions deals face different tax bills – Analysis of merger relief, cessation rules, and CGT implications for M&A transactions

CoinMarketCap – Nigeria Releases Crypto Tax Guidelines – Detailed coverage of virtual asset withholding rules and stamp duty

LinkedIn – Nigeria Tax Act Changes Chargeable Gains Computation – Detailed explanation of computation formula, abolition of balancing adjustments, and integration of gains into income tax

China Tax Portal – Nigeria CGT Rules for Stock Trading – Coverage of share disposal exemptions and compliance requirements

BusinessDay – Share or asset deal? Tax optimisation in restructuring – Analysis of restructuring reliefs and VAT/CGT exemptions

Mondaq – New Capital Gains Tax Rules for M&A Transactions – Comprehensive guide on scope of chargeable assets, exemptions, and cross-border considerations

Andersen Nigeria – The New Capital Gains Tax Regime – In-depth analysis of cost basis reset, grandfathering, and private company valuation challenges

Let’s Talk About Your Asset Disposal Tax Planning Needs

Navigating the tax implications of tangible asset disposals under the NTA 2025 can be complex. At Qeeva Advisory, we understand the challenges faced by Nigerian businesses and individuals in structuring asset disposals efficiently, claiming available reliefs, and ensuring full compliance.

Whether you need help with transaction structuring, exemption identification, or compliance support, we are here to support you.

📞 Call us: (+234) 802 320 0801, (+234) 807 576 5799

📧 Email: info@qeeva.com

📍 Visit us: 5, Ishola Bello Close, Off Iyalla Street, Alausa, Ikeja, Lagos, Nigeria

Contact us today to schedule a consultation. Let us help you navigate asset disposal tax planning with confidence.

Your journey to tax-efficient asset disposal starts with a conversation. Let’s talk.