TAXATION OF INVESTMENT INCOME UNDER THE NIGERIA TAX ACT (2025)

The Nigeria Tax Act (NTA) 2025, which took effect on 1 January 2026, fundamentally reshaped the taxation of investment income in Nigeria. The reforms consolidated and modernised the country’s tax code, altering rates, widening scope, and refining exemptions and administrative rules for investors across all asset classes.

For investors—whether individuals, corporate entities, or non-residents—understanding the new tax framework is essential for making informed investment decisions. A 17% return on a taxable investment cannot be assessed in isolation from a 15% return that is exempt from tax. The investor needs to compare what each option actually leaves in their pocket after tax, while also considering the risks involved.

This comprehensive guide examines the taxation of investment income under the NTA 2025, covering government securities, equities, real estate, collective investment schemes, real estate investment trusts (REITs), foreign investment income, and the tax treatment of digital assets.

The Pain Points: Why Investment Tax Matters Now More Than Ever

The After-Tax Return Reality

Returns from investment assets in Nigeria are subject to varying tax treatments, depending on the nature of the instrument and the type of income generated. While some assets benefit from exemptions, others attract withholding or income taxes that affect net yields.

For investors, the key question is no longer just gross return—it is the after-tax return. A lower-yielding government bond could deliver a more competitive return after tax than a higher-yielding taxable investment because the bond income is exempt.

The Need for Tax Planning

Tax planning should begin when investors are deciding where to put their money, not when the tax bill arrives. Understanding the rules before buying, earning, or selling an asset can help investors legally retain more of their returns while avoiding the cost of discovering a tax liability only after the investment has already been made.

The Distinction Between WHT and Final Liability

Investors should also distinguish between withholding tax and their final tax liability. The absence of withholding tax on a particular investment income does not automatically mean the income is tax-free. Likewise, tax deducted at source may in some circumstances serve as a credit against the investor’s final liability rather than being the final tax.

Self-Assessment Obligation

Individuals whose income does not arise from employment must self-assess. This means that all economic activities, including all dividends, investments, disposals, investment profits, prizes, bonuses, winnings, and others, must be self-assessed.

Key Changes Under the NTA 2025

Integration of CGT into Income Tax System

Under the new regime, individuals no longer pay the former flat 10% capital gains tax on chargeable gains. Capital gains for individuals are now taxed at the applicable progressive personal income tax rates (0% to 25%). For companies, capital gains are now taxed at the standard company tax rate (effectively 30% under the new framework), eliminating the previous arbitrage between trading income and capital gains.

Expanded Scope of Chargeable Assets

The NTA 2025 states that all forms of property are chargeable assets, whether situated in Nigeria or not. This explicitly includes digital and virtual assets.

Indirect Transfer Rules

One of the most significant developments under the NTA 2025 is the extension of capital gains taxation to indirect transfers. The law allows the tax authority to look beyond the legal form of an offshore transaction and focus on its underlying economic substance. Even though the shares being disposed of are in a non-resident company, the transaction may be subject to Nigerian tax if it leads to a change in control of a Nigerian company or Nigerian-situated asset.

Digital Asset Taxation

The NTA 2025 introduces express provisions bringing digital or virtual assets within the scope of capital gains taxation. Digital assets include crypto assets, utility tokens, security tokens, non-fungible tokens (NFTs), and other similar digital representations of value.

Taxation by Asset Class

1. Government Bonds and Securities

Federal and State Government Bonds

Interest income earned from Federal Government of Nigeria bonds, Sukuk, and state government bonds is exempt from income tax and withholding tax. Capital gains arising from the disposal of these securities are also exempt following the repeal of the standalone Capital Gains Tax Act.

Government bonds can offer tax-free income. Investors comparing two investments with similar headline returns may end up with different after-tax amounts depending on the security chosen. A lower-yielding government bond could deliver a more competitive return after tax than a higher-yielding taxable investment because the bond income is exempt.

Treasury Bills

Treasury bills are no longer fully tax-exempt under the new tax system. Interest earned on Treasury bills attracts a 10% withholding tax, deducted at source by banks and stockbrokers. For most investors, this withholding tax represents a final liability, although certain small companies and qualifying agricultural businesses may qualify for exemptions based on turnover thresholds.

Federal Government bonds and Central Bank of Nigeria Open Market Operation bills remain exempt from this charge, creating a distinction within the fixed-income market.

Operational Requirements

Under Section 4 of the Nigeria Tax Administration Act (NTAA) 2025, a valid Tax Identification Number is mandatory for investment transactions, including bond purchases and secondary market trades.

2. Equities and Shares

Dividend Taxation

Dividends paid by Nigerian companies attract a 10% withholding tax deducted at source. For individual investors, this withholding tax is final. For corporate investors, dividends are treated as Franked Investment Income, preventing further taxation when redistributed.

Capital Gains on Shares

Gains from the disposal of shares can qualify for exemption where:

• Total proceeds do not exceed N150 million in any 12 consecutive months, and

• The attributable gain does not exceed N10 million

Rollover Relief

Rollover relief is available, allowing gains to be exempt where proceeds are reinvested in shares within the same assessment year. The law provides relief where the proceeds from disposal are reinvested within the same year of assessment in acquiring shares of the same or another Nigerian company. In this case, tax applies only proportionally to the portion of proceeds not reinvested.

Stamp Duty on Share Transfers

Share transactions attract a N50 stamp duty charge on electronic transfers.

3. Real Estate

Taxation of Rental Income

Rental income is taxable as part of the investor’s total income. For individuals, rental income is taxed at progressive personal income tax rates from 0% (on the first N800,000) to a maximum of 25% (on income above N50 million). For companies, rental income is subject to the standard Companies Income Tax rate of 30%.

Taxable income can generally be reduced through allowable deductions, such as maintenance and repair costs, management fees, interest on loans obtained for the property, and other expenses wholly and exclusively incurred in generating the rental income.

Capital Gains on Property

Gains from property disposals are assessed differently based on the taxpayer’s status. For individuals, profits from property sales are taxed under the Personal Income Tax system, with marginal rates capped at 25%. Corporate entities are required to treat such gains as taxable income, subject to the standard Companies Income Tax rate of 30%.

Exemptions for Principal Residence

Exemptions remain in place for gains arising from the disposal of a principal residence and certain low-value assets, subject to specified thresholds.

Indirect Taxes on Property

Sales and leases of residential properties are exempt from Value Added Tax (VAT), while commercial property transactions attract VAT at 7.5% when carried out as a business activity. Stamp duties apply to property-related instruments such as conveyances, leases, and mortgages.

Global Reach for Tax Residents

Nigerian tax residents are liable to tax on worldwide property income and gains, including rental income or proceeds from the disposal of foreign properties, although relief may be available through foreign tax credits and double taxation treaties.

4. Collective Investment Schemes (Mutual Funds)

Tax-Exempt Status at Fund Level

Mutual funds and other Collective Investment Schemes (CIS) are structured to avoid multiple layers of taxation on the same income. Income and capital gains earned by SEC-registered schemes are exempt from Companies Income Tax, allowing portfolio rebalancing without tax at the scheme level.

Taxation of Distributions

At the investor level, distributions attract a 10% withholding tax, which is final for individual unit holders. Gains realised from redeeming units in a SEC-approved CIS are exempt from Capital Gains Tax, while transfers of units are exempt from stamp duties.

VAT on Management Fees

Management fees charged by fund managers are subject to VAT at 7.5%.

WHT Exemptions for Asset-Backed Securities

The government has issued VAT and withholding tax waivers which apply to asset and mortgage-backed securities. Accordingly, dividends of publicly traded REIT securities are exempt from withholding tax in the hands of investors, and VAT and Capital Gains Tax are not applicable on the sale of the securities.

5. Real Estate Investment Trusts (REITs)

Tax Treatment of REITs

Under the Nigeria Tax Act 2025, REITs are treated as companies and unit holders as shareholders.

Exemption for Distributed Income

Dividend and rental income received by a REICO on behalf of its shareholders is exempt from company income tax (CIT), provided that a minimum of 75% of the dividend or rent earned is distributed within 12 months of the end of the financial year in which the income was earned. However, where a REICO fails to distribute the dividend or rental income within the stipulated 12-month period, the income would be subject to CIT.

Withholding Tax Exemption at REICO Level

Dividends and distributions received by a REICO are exempt from withholding tax (WHT). Accordingly, where a REICO has an equity stake in a company, the company will be required to pay gross dividends to the REICO without deducting WHT. However, the REICO shall upon distribution to its shareholders deduct tax at 10% and remit same to the relevant tax authority.

VAT and CGT Exemptions

VAT and Capital Gains Tax are not applicable on the sale of REIT securities.

6. Foreign Investment Income

Exemption for Repatriated Passive Income

Section 162 of the Nigeria Tax Act 2025 provides a significant exemption for foreign investment income. Dividends, interest, rent, and royalties earned outside Nigeria and brought into the country through approved financial channels are exempt from tax.

Conditions for Exemption

Qualifying foreign income must be remitted through approved financial channels to benefit from the exemption, reinforcing the role of regulated banks in tracking and formalising cross-border capital flows.

Continuity and Clarification

Tax policy experts note that the provision provides continuity but with clearer boundaries compared to earlier reform drafts, which had created uncertainty around the scope of taxable foreign income.

Double Taxation Treaties

Double tax treaties become especially important under the new framework because they can preserve returns on dividends, interest income, and cross-border investments when properly applied. Claiming benefits under Nigeria’s double tax treaties can help reduce withholding tax exposure and prevent the same income from being taxed both abroad and in Nigeria.

7. Digital and Virtual Assets

Taxable Status

The NTA 2025 introduces express provisions bringing digital or virtual assets within the scope of capital gains taxation. Profits from cryptocurrencies, NFTs, and related digital assets are therefore taxable.

Taxable Events

Tax applies to realised gains, when assets are sold or exchanged at a profit, not to mere ownership. Gains from trading, staking rewards, and similar activities are treated like other forms of investment income.

Definition of Digital Assets

Section 201 of the NTA 2025 defines digital assets to include crypto assets, utility tokens, security tokens, non-fungible tokens, and other similar digital representations of value.

Challenges

Digital assets present unique challenges because of their volatility, with values changing multiple times in a single day. In practice, disposals can occur in two ways: either directly into fiat currency, or through a swap into another digital asset.

Compliance Concerns

The question of compliance and reporting remains unresolved. Unlike traditional assets, digital assets are often held in decentralized wallets or traded on offshore exchanges, outside the reach of conventional regulatory oversight. This raises fundamental concerns about how the Nigerian tax authority will detect disposals and enforce compliance.

Withholding Tax on Investment Income

Strategic Considerations for Investors

1. Consider Government Bonds for Tax-Free Income

Income from federal and state government bonds is exempt from tax under the NTA 2025. Investors should consider the tax treatment when comparing two investments with similar headline returns.

2. Use Collective Investment Schemes for Tax Efficiency

Collective investment schemes can reduce tax exposure for investors. Dividends distributed by authorised collective investment schemes are exempt from income tax, and unit redemptions are exempt from CGT.

3. Time Your Capital Gains and Dividend Income

When selling shares, property, or other investment assets, timing may become more important. Large one-off disposals can trigger bigger tax obligations depending on how gains are assessed. Spreading disposals across tax years may help smooth exposure and preserve more of the return.

4. Utilise Rollover Relief

Where proceeds from a share disposal are reinvested in shares within the same assessment year, the gain can be exempt from tax. This relief applies only to the portion of proceeds reinvested.

5. Understand Tax Residency Status

Your tax residency status could determine how much of your income Nigeria can tax. Non-residents are generally taxed only on income sourced from Nigeria. For diaspora investors, tracking travel days, maintaining proper records, and understanding where economic ties are strongest could help avoid unexpected tax exposure.

6. Use Double Tax Treaties

Claiming benefits under Nigeria’s double tax treaties can help reduce withholding tax exposure and prevent the same income from being taxed both abroad and in Nigeria, particularly on dividends, interest income, and certain business earnings.

7. Structure Real Estate Investments Carefully

Investing through a Nigerian company or regulated real estate investment structure can offer stronger governance, continuity, and in some cases tax efficiencies. However, these structures also come with additional compliance obligations, especially around reporting, rental income, and gains from property disposal.

Frequently Asked Questions

Q: What is the tax treatment of Federal Government bonds under the NTA 2025?
A: Interest income earned from Federal Government of Nigeria bonds, Sukuk, and state government bonds is exempt from income tax and withholding tax. Capital gains arising from the disposal of these securities are also exempt.

Q: Are Treasury bills still tax-free?
A: No. Treasury bills are no longer fully tax-exempt. Interest earned on Treasury bills attracts a 10% withholding tax, deducted at source by banks and stockbrokers.

Q: What is the withholding tax rate on dividends?
A: Dividends paid by Nigerian companies attract a 10% withholding tax deducted at source. For individual investors, this withholding tax is final.

Q: How are capital gains on shares taxed?
A: Gains from the disposal of shares can qualify for exemption where total proceeds do not exceed N150 million in any 12 consecutive months and the attributable gain does not exceed N10 million. Rollover relief is also available for reinvested proceeds.

Q: What is the tax treatment of foreign investment income?
A: Dividends, interest, rent, and royalties earned outside Nigeria and brought into the country through approved financial channels are exempt from tax under Section 162 of the NTA 2025.

Q: How are real estate investment trusts (REITs) taxed?
A: Dividend and rental income received by a REICO on behalf of its shareholders is exempt from CIT, provided at least 75% is distributed within 12 months. Dividends and distributions received by a REICO are exempt from WHT. VAT and CGT are not applicable on the sale of REIT securities.

Q: Are digital assets taxable in Nigeria?
A: Yes. Section 201 of the NTA 2025 defines digital assets to include crypto assets, utility tokens, security tokens, and NFTs. Profits from cryptocurrencies, NFTs, and related digital assets are taxable.

Q: What is the new CGT rate for companies?
A: For companies, capital gains are now taxed at the standard company tax rate (effectively 30% under the new framework), up from the previous flat 10% rate.

The Bottom Line

The NTA 2025 has fundamentally reshaped the taxation of investment income in Nigeria. For investors, understanding the new rules is essential for making informed investment decisions and maximising after-tax returns.

Key Takeaways:

Government bonds offer tax-free income: Interest from federal and state government bonds is exempt from income tax and withholding tax. Capital gains are also exempt.

Treasury bills now attract WHT: Treasury bills are no longer fully tax-exempt. Interest earns a 10% withholding tax, deducted at source.

Dividends attract 10% WHT: Dividends from Nigerian companies attract 10% withholding tax, which is final for individual investors.

CGT exemption for small share disposals: Gains from share disposals are exempt where proceeds do not exceed N150 million and gains do not exceed N10 million.

Rollover relief is available: Gains from share disposals are exempt where proceeds are reinvested in shares within the same assessment year.

REITs offer tax-efficient real estate investment: REITs benefit from CIT exemption on distributed income, WHT exemption at fund level, and VAT/CGT exemption on securities sales.

Foreign passive income is exempt: Dividends, interest, rent, and royalties earned abroad and repatriated through approved channels are exempt from tax.

Digital assets are taxable: Cryptocurrencies, NFTs, and other digital assets are now expressly within the scope of capital gains taxation.

Tax residency matters: Non-residents are generally taxed only on income sourced from Nigeria. Tax residency status determines the scope of taxable income.

After-tax returns matter more: For investors, tax planning should begin when deciding where to put money, not when the tax bill arrives. The tax treatment of an investment can significantly affect net returns.

Your job is to be prepared. Understand the tax implications of different investment asset classes. Structure investments efficiently. Use available exemptions. Claim reliefs where available. Seek professional guidance.

With the right approach and the right partner, you can turn investment tax planning from a compliance burden into a strategic advantage for maximising after-tax returns.

Suggested Reading from Our Blog

Tax Implications of Tangible Asset Disposals in Nigeria – Understand CGT on asset disposals under NTA 2025.

Taxation of Regulated Securities Lending Transactions – Understand tax treatment of securities lending.

Tax Strategies and Planning – Structure your business to optimize your tax position.

Regulatory Compliance In Nigeria – Comprehensive overview of tax compliance requirements.

Reference Links / Sources

BusinessDay – How investors can legally reduce tax they pay on investments – Comprehensive coverage of government bonds exemption, collective investment schemes, foreign income exemptions, CGT changes, and tax planning strategies

BusinessDay – Taxation of Personal Income – Self-assessment obligations for investment income and dividends

BusinessDay – Nigeria retains foreign investment tax relief – Section 162 exemption for foreign dividends, interest, rent, royalties, and repatriation conditions

Andersen Nigeria – Capital Gains Tax Under NTA 2025 – CGT rate increase from 10% to 30% for companies and up to 85% for PPTA regime companies

DLA Piper REALWorld – Nigeria Tax Summary – REIT taxation, WHT exemptions, and collective investment schemes treatment

BusinessDay – Explainer: How your top 5 assets fit into Nigeria’s new tax brackets – Detailed tax treatment of real estate, government bonds, Treasury bills, equities, and mutual funds

RegTech Africa – New tax law targets double taxation – NRS clarification on collective investment schemes and foreign income exemptions

Reanda International – Key Changes to CGT under NTA 2025 – CGT rate changes, expanded scope including digital assets, and indirect transfer rules

DLA Piper REALWorld – Tax on Income from Real Estate – REIT exemptions, rental income taxation, deductible expenses, and WHT on rental income

BusinessDay – Six smart bets for diaspora investors – Tax residency, DTAs, real estate structuring, retirement savings, and timing strategies

Mondaq – Capital Gains Tax Under NTA 2025 – Indirect transfer rules, digital asset taxation, compliance challenges, and valuation issues

BusinessDay – 7 common misconceptions debunked – Digital asset definition under Section 201, taxable events, and CGT on property

DLA Piper REALWorld – Small Company Definition – Small company definition and CIT rates

Let’s Talk About Your Investment Tax Planning Needs

Navigating the taxation of investment income under the NTA 2025 can be complex. At Qeeva Advisory, we understand the challenges faced by investors in understanding tax implications, structuring investments efficiently, and maximising after-tax returns.

Whether you need help with investment structuring, tax planning, 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 investment tax planning with confidence.

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