By Samson Yaki


The Chairman of the Nigerian Law Reform Commission Professor Jumai A. M. Audi has stated that the current effort to reform the Capital Gains Tax Act will clarify, simplify, improve and strengthen the provision of the Act so as to ensure effective and fair collection of taxes.

“The aim of the reform of this Act is to clarify, simplify, improve and strengthen the provisions of the Act so that taxes will be collected more effectively and fairly both in monetary and equitable terms to enhance the revenue of the nation for the needs of the citizens.”

Professor Audi, who made this known at the national workshop on the reform of the Capital Gains Tax Cap. C1. LFN. 2004 in Abuja recently, said if Capital Gains Taxes are effectively and fairly collected, it will enhance the revenue generation of the country for the needs of the citizens.
While lamenting the shortcomings of the Act to include failure to indicate manner of computing changeable gains, exemption of bodies and transactions from Capital Gains Tax, low capital gain tax rate of 10%, among others, Prof Jummai said the workshop was to look into tackling such challenges in the areas of increase in rate of capital tax gains, ammendment of sections 5, 30(2), 37, 38 and 45 for effective taxation.

She said the workshop was expected to provide guide to stimulate discussions and further research to enrich the commission’s report.
She tasked the participants to bring their wealth of knowledge in taxation in order to update the Act to satisfy the yearnings of Nigerians and to enhance revenue generation for the nation.

Capital Gains Tax are taxed only when profits are realized by sale or exchange of assets.

“Gains on assets transferred at death are never taxed. Capital gains tax is the type of tax levied on individuals and corporate bodies when gains arise from disposed capital assets.

“Assets which attract capital gains tax on disposal include: plants and machinery, land and buildings, good wills of business, shares and many others,” she added.
In his sibmision, Professor K. M. Waziri of the Faculty of Law University of Abuja, said Capital Gains Tax offers government the additional source which compliments other forms of taxation without placing undue burden on the citizenry, noting that it should be administered in a way to give incentives to payers so as to encourage non payers to do so.

Professor Waziri suggested that to overcome some of the weaknesses of the Act, gains accruing to the bodies exempted should be made chargeable, make clear specification of persons and gains chargeable, capital gains charges should be made recurrent, capital gains should be reviewed upward to 15%, rate and 20% for individuals and companies resident in Nigeria and ECOWAS countries respectively.

He further suggested that countries outside ECOWAS should be charged 20% and 25% for individuals and companies respectively. He called for stiff penalty for evasion and incentives for compliance to ensure effectiveness in the tax collection. On his own part, Professor D.C. John of the department of commercial law Ahmadu Bello University, Zaria, laments the unpreparedness of Nigeria for capital gain taxation owing to unavailability of accurate data to ascertain all tax yielding activities.

He suggested that the scope of Capital Tax Gains be reduced to manageable proportion. ” Reduce the rate substantially, charge on foreign gains should be abandoned.
“There should be a system whereby a tax is charged as a percentage of capital sum received upon the disposal of assets. No regard will, under this system, ‘be had expense laid out and possible losses incurred by the disposer
A flat rate of 3% of the sum received is recommended”, he said.

Leave a Reply

Your email address will not be published. Required fields are marked *