Capital Gains Tax (CGT) is imposed on gains accruing to any
person on disposal of assets under the Capital Gains Tax Act (CGTA). The
applicable tax rate for CGT is 10%.
CGT in respect of companies are collected by the Federal Inland Revenue Service
(FIRS), while the State tax authority covering the location where an individual
resides collects the individual’s CGT. Roll-over relief is available to any
company acquiring a new asset to be used for the purposes of the trade in
replacement of an old one.
Where assets situated outside
Nigeria are disposed by a non-Nigerian company, or an expatriate, CGT is only
charged in respect of that part of the gain (if any) which is brought into or
received in Nigeria. Generally, gains on transfer of securities, stocks and
shares are exempt from CGT.
CHARGEABLE ASSET
All forms of property are classified as assets for the
purposes of CGTA whether situated in Nigeria or not (except specifically
excluded). These properties include:
a. options, debts and incorporeal
properties generally;
b. any currency other than Nigerian
currency; and
c.
any form of property created by the person disposing it, or otherwise coming to be owned without
being acquired.
EXCLUSION FROM
CHARGEABLE ASSETS
CGTA exempts some gains from taxation; these include gains
accruing to/from:
(a) Charities and Statutory bodies;
(b) Retirement Benefit Schemes;
(c) Decorations;
(d) Stocks and Shares;
(e) Replacement of Business Assets;
(f) Re-invested Proceeds;
(g) Life Assurance Policies and
other Insurance Policies;
(h) Motor Cars;
(l) Gifts;
(j) Disposal of Principal Private
Residence;
(k) Chattels sold for N1, 000 or
less in a year; and
(l) Compensation from Personal
Injury.
CALCULATION
OF CAPITAL GAINS
Capital gains
represent mainly the excess of disposal proceeds over the cost of the
particular assets.
In the
computation of any chargeable gains, gains chargeable to tax shall be the
difference between the consideration accruing to any person on the disposal of
an assets and any sum to be excluded from that consideration, and the amount of
the value of any expenditure allowable to such person on such disposal.
