Tax on Investment Income in Nigeria: Dividends, Interest, Gains

How Nigeria taxes dividends, interest, and capital gains under the NTA 2025. Covers WHT rates, government bond exemptions, CGT on shares and property, and filing.

Your salary is not the only income the Nigerian tax system cares about. Every dividend payment that hits your brokerage account, every interest credit from your fixed deposit, and every profit you make selling shares or property triggers a tax obligation. The good news is that for most individual investors, the bulk of this tax is deducted at source — you never have to compute or remit it yourself. The challenge is understanding what has been deducted, what is exempt, what requires a separate filing, and where the Nigeria Tax Act 2025 has changed the rules.

This guide covers all three categories of investment income — dividends, interest, and capital gains — with the rates, exemptions, worked examples, and filing requirements that apply from the 2026 tax year.

Part 1: Dividends

When a Nigerian company declares a dividend, it is required to deduct withholding tax (WHT) at 10% before paying the net amount to shareholders. This applies to all dividends — interim, final, and special — paid by companies incorporated in Nigeria.

How Dividend WHT Works

You never handle the WHT yourself. If a company declares a dividend of ₦5 per share and you hold 10,000 shares, your gross dividend is ₦50,000. The company deducts 10% (₦5,000) and remits it to the NRS. You receive ₦45,000 in your bank or brokerage account. The ₦5,000 has already been paid on your behalf.

For most individual investors, this 10% WHT is the final tax on dividend income. You do not need to include the dividend in your annual PIT return and pay additional tax on it — the withholding tax settles the obligation. This “final tax” treatment makes dividend income one of the simplest investment income categories to deal with from a compliance standpoint.

Dividends From Foreign Companies

If you receive dividends from foreign companies — through an international brokerage account, a US-listed stock, or a foreign subsidiary — the income is taxable in Nigeria if you are a Nigerian tax resident. Nigerian tax residence is based on physical presence (183 days or more in a 12-month period) or having a permanent home in Nigeria.

Foreign dividends are included in your worldwide income and subject to Nigerian tax. However, you can claim a credit for any foreign tax already withheld on the dividend, provided Nigeria has a Double Taxation Agreement (DTA) with that country or you qualify for unilateral relief under the NTA 2025. Nigeria has DTAs with the United Kingdom, Canada, China, South Africa, Belgium, France, Netherlands, Spain, Pakistan, Romania, the Philippines, South Korea, Sweden, Czech Republic, and Singapore, among others.

If you hold US stocks through a platform like Bamboo, Chaka, or Trove, the US typically withholds 30% on dividends (or 15% if a DTA applies — though Nigeria does not currently have a DTA with the US). You can claim unilateral relief by offsetting the US tax against your Nigerian tax liability on the same income, up to the amount of Nigerian tax that would have applied.

Dividends From Unit Trusts and Mutual Funds

Distributions from collective investment schemes — unit trusts, mutual funds, and Real Estate Investment Trusts (REITs) — are subject to WHT at 10% on the dividend component. However, gains distributed from the scheme that represent capital appreciation (rather than dividend income received by the fund) may be treated as capital gains, not dividends, with different tax implications. The fund manager should provide a breakdown of distributions showing income versus capital components.

Part 2: Interest Income

Interest earned on deposits, bonds, and other fixed-income instruments is subject to 10% WHT, deducted at source by the paying institution. When your bank credits interest on a fixed deposit or savings account, the amount you see is the net — the bank has already deducted and remitted 10% to the NRS.

Interest That Is Taxable at 10% WHT

• Fixed deposits. Interest on fixed deposit accounts with commercial banks — 10% WHT deducted by the bank.
• Savings accounts. Interest on savings accounts — 10% WHT deducted by the bank. In practice, savings interest is often negligible, but the withholding still applies.
• Corporate bonds. Interest on bonds issued by Nigerian companies — 10% WHT deducted by the issuer or paying agent.
• Money market instruments. Interest on commercial paper, bankers’ acceptances, and other money market instruments issued by corporates — 10% WHT.
• Peer-to-peer lending. Interest earned from platforms like FairMoney, Renmoney, or PiggyVest’s fixed-return products — 10% WHT should be deducted by the platform.

Like dividend WHT, the 10% withholding on interest income is typically treated as a final tax for individual investors. You do not need to add the interest to your PIT return and pay additional tax.

Interest That Is Exempt From Tax

The NTA 2025 maintains important exemptions for interest on government securities, continuing a long-standing policy to encourage investment in federal government debt instruments:

• Federal Government of Nigeria (FGN) Bonds. Interest income on FGN Bonds is exempt from income tax. If you hold FGN Bonds through your stockbroker or directly through the DMO’s FGN Savings Bond programme, the interest you receive is completely tax-free. No WHT is deducted.
• Treasury Bills. Discount income (the difference between the purchase price and the face value at maturity) on Nigerian Treasury Bills is exempt from tax for all investors. T-bills are issued at a discount and mature at face value — the “interest” is the discount, and it is tax-free.
• FGN Sukuk. Returns on FGN Sukuk (Islamic bonds) receive the same exemption as conventional FGN Bond interest.
• FGN Savings Bonds. Interest on the retail FGN Savings Bond programme is tax-exempt.

These exemptions make government securities particularly attractive on an after-tax basis. A Treasury Bill yielding 18% delivers the full 18% to the investor. A corporate bond yielding 20% delivers 18% after the 10% WHT deduction (20% × 90% = 18%). The government instrument matches the higher-yielding corporate bond once tax is factored in — with lower credit risk.

Worked Example: Comparing After-Tax Returns

Funke has ₦10,000,000 to invest for one year. She is comparing three options:

The FGN Bond delivers the highest after-tax return despite a lower nominal rate than the corporate bond. The Treasury Bill matches the corporate bond’s after-tax return with lower risk. Tax efficiency is a critical factor in fixed-income investment decisions — not just the headline yield.

Part 3: Capital Gains Tax

Capital gains tax (CGT) applies when you dispose of a chargeable asset at a profit. Under the NTA 2025, the rate is 10% on the net gain — the difference between your disposal proceeds and your acquisition cost (plus allowable incidental costs).

What Counts as a Chargeable Asset?

CGT applies to gains on disposal of virtually any asset of value:

• Shares and securities (both listed and unlisted)
• Land and buildings (other than your principal private residence in certain circumstances)
• Business assets (machinery, vehicles, equipment)
• Intellectual property rights
• Interests in partnerships
• Foreign currency holdings disposed of at a gain
• Digital assets (cryptocurrency and tokens) — the NTA 2025 explicitly brings digital assets within the tax framework

How to Compute Capital Gains Tax

The computation follows a straightforward formula:

Chargeable gain = Disposal proceeds − Acquisition cost − Allowable incidental costs

Allowable incidental costs include broker commissions, legal fees, stamp duties, and any costs directly related to the acquisition or disposal of the asset. Improvement expenditure on property (extensions, renovations that add value — not maintenance) can also be deducted.

Worked Example: Selling Shares

Bola purchased 50,000 shares of GTBank (now GTCO) on the Nigerian Exchange (NGX) in March 2024 at ₦28 per share. She sells them in July 2026 at ₦52 per share.

Bola owes ₦113,400 in capital gains tax on this transaction. Unlike dividend and interest WHT, CGT on share disposals is not automatically deducted by the broker. Bola must self-assess and include this in her annual tax return.

Worked Example: Selling Property

Chidi purchased a three-bedroom flat in Lekki in 2020 for ₦35,000,000. He sells it in 2026 for ₦65,000,000. He spent ₦5,000,000 on renovations (a new kitchen and additional bedroom) and ₦2,500,000 on legal fees, agency commission, and Governor’s Consent processing for both the purchase and sale.

Chidi’s CGT liability is ₦2,250,000. Note that routine maintenance (repainting, plumbing repairs, servicing generators) is not improvement expenditure and cannot be deducted — only capital improvements that enhance the property’s value qualify.

CGT on Cryptocurrency and Digital Assets

The NTA 2025 explicitly defines digital assets and brings them within the tax net. If you buy Bitcoin, Ethereum, USDT, or any other cryptocurrency and sell it at a profit, the gain is a chargeable gain subject to 10% CGT. The computation is identical to shares: disposal proceeds minus acquisition cost minus transaction fees (exchange fees, network/gas fees, withdrawal charges).

If you trade frequently, each disposal is a separate CGT event. You cannot net gains against losses from different assets in the same period — each transaction stands alone unless the loss and gain relate to the same asset class and specific rules apply. Keep records of every purchase and sale: the date, the amount, the exchange rate (for crypto purchased in USD or other foreign currency), and all transaction fees.

Exemptions and Reliefs From CGT

The following disposals are exempt from or attract relief on CGT:

• Proceeds reinvested in replacement assets. If you dispose of a business asset and reinvest the full proceeds in a replacement asset of the same class within the stipulated period, you can defer (roll over) the gain. The gain reduces the cost base of the new asset, deferring the CGT until the replacement asset is eventually sold without reinvestment.
• Life insurance policy proceeds. Gains on the maturity or surrender of a life insurance policy are generally exempt.
• Gifts to approved institutions. Disposals by way of gift to educational institutions, government bodies, or approved charitable organisations may be exempt.
• Nigerian government securities. Gains on the disposal of FGN Bonds, Treasury Bills, and other government debt instruments are exempt from CGT.

There is no general CGT-free annual allowance in Nigeria (unlike the UK, for example, which provides each individual with an annual exempt amount). Every naira of chargeable gain is taxable at 10%.

Putting It Together: Total Tax on a Diversified Portfolio

Most Nigerian investors hold a mix of equities, fixed-income instruments, and other assets. Here is how the total tax burden looks across a sample portfolio in a single year.

Ngozi holds a diversified investment portfolio. Her 2026 investment income:

Ngozi’s effective tax rate across her entire portfolio is 5.6% — because 44% of her income comes from tax-exempt government securities and the remaining taxable income faces only a 10% rate. The portfolio allocation directly affects her after-tax return.

Filing Obligations for Investment Income

Income Where WHT Is the Final Tax (No Additional Filing Required)

For dividends and interest income where 10% WHT has been deducted at source, individual investors generally have no additional filing obligation. The withholding tax is the final tax — you do not need to include this income in your annual PIT return or pay any top-up.

However, you should still keep records. If the State IRS queries your overall income, evidence that WHT was deducted (bank statements, dividend certificates, WHT credit notes from your broker) is your proof that the tax has been paid.

Capital Gains (Self-Assessment Filing Required)

Capital gains tax is not deducted at source. When you sell shares, property, digital assets, or any other chargeable asset at a profit, you must:

1. Compute the chargeable gain (disposal proceeds minus acquisition cost minus allowable incidental costs)
2. Calculate the CGT at 10% of the gain
3. Include the capital gain and CGT liability in your annual tax return
4. Pay the CGT to the relevant tax authority

For individuals, CGT on non-business assets (personal investments, shares, residential property) is filed with your State Internal Revenue Service as part of your annual PIT return, due by 31 March. For companies, CGT is included in the CIT return filed with the NRS.

For property transactions, buyers and their solicitors should confirm the CGT position before completing the transaction. In Lagos and several other states, evidence of CGT payment (or exemption) may be required as part of the Governor’s Consent process for property transfers.

Foreign Investment Income (Declaration Required)

If you are a Nigerian tax resident and receive dividends, interest, or capital gains from foreign investments, you must declare this income in your annual PIT return. Claim credit for any foreign tax already paid using DTA provisions or unilateral relief. Convert foreign-currency income to naira at the CBN rate on the date of receipt.

Tax-Efficient Investment Strategies

Understanding how each asset class is taxed allows you to structure your portfolio for maximum after-tax returns:

• Maximise government securities allocation. FGN Bonds and Treasury Bills deliver competitive yields with zero tax. Every percentage point of yield on a government security is worth more than the same yield on a taxable instrument. If you are choosing between a 17% T-bill and an 18% fixed deposit, the T-bill wins after tax (17% vs. 16.2%).
• Hold dividend-paying stocks in taxable accounts. The 10% WHT on dividends is relatively low and is a final tax — no further compliance burden. Dividend stocks are already tax-efficient for Nigerian investors.
• Track all transaction costs. Brokerage commissions, SEC fees, NGX fees, legal fees, and stamp duties reduce your chargeable gain. Every documented cost saves you 10% of its value in CGT. A ₦50,000 brokerage fee saves ₦5,000 in CGT.
• Use voluntary pension contributions. Up to 20% of your annual income contributed to an RSA is tax-deductible. While this deduction primarily reduces your PIT on employment or self-employment income (not investment income directly), it reduces your overall tax burden and pension withdrawals at retirement have their own favourable treatment.
• Keep meticulous records of acquisition costs. If you cannot prove what you paid for an asset, the tax authority may deem a lower cost base — increasing your chargeable gain and CGT. This is especially critical for shares accumulated over time through multiple purchases, property bought years ago, and cryptocurrency traded across multiple exchanges.

Common Mistakes With Investment Income Tax

• Assuming all investment income is tax-free. Many Nigerian investors believe dividends and interest are not taxed because the WHT is deducted silently by the bank or company. The tax is being paid — you just do not see it. Understanding that 10% of your dividend and interest income goes to tax helps you make better allocation decisions.
• Ignoring capital gains tax on share sales. CGT is self-assessed, and many retail investors sell shares without computing or paying CGT. As the NRS and securities regulators improve data-sharing, unreported capital gains will increasingly attract attention, assessments, and penalties.
• Ignoring CGT on property sales. Property disposals generate some of the largest capital gains — and some of the largest CGT liabilities. Sellers who do not account for CGT when pricing a sale may find their profit substantially reduced. Factor CGT into your selling price calculation from the outset.
• Not claiming foreign tax credits. If you invest internationally and pay foreign WHT on dividends or interest, you are entitled to credit that foreign tax against your Nigerian liability. Without claiming the credit, you pay tax twice on the same income.
• Paying WHT on government securities. If a bank or intermediary deducts WHT on FGN Bond interest or T-bill discount, query it — these instruments are exempt. It does happen, and you are entitled to a refund or credit.
• Not keeping cryptocurrency transaction records. Digital asset gains are taxable. Exchanges may shut down, lose records, or become inaccessible. Download and store your transaction history regularly — dates, amounts, exchange rates, and fees for every trade.
• Confusing gross yield with after-tax yield. A fixed deposit advertised at 20% actually delivers 18% after WHT. A corporate bond at 22% delivers 19.8%. Always compute the after-tax yield before comparing instruments, especially against tax-exempt government securities.

Final Thoughts

Tax on investment income in Nigeria follows a simple structure: dividends and interest attract 10% WHT deducted at source (final tax for individuals), government securities are exempt, and capital gains are taxed at 10% on a self-assessment basis. For most individual investors, the compliance burden is minimal — the banks and companies handle the WHT, and only capital gains require active computation and filing.

Where the real value lies is in using this knowledge to make better investment decisions. The difference between a tax-exempt FGN Bond at 18.5% and a taxable fixed deposit at 18.5% is ₦185,000 per year on a ₦10,000,000 investment. Over a decade of compounding, that difference grows substantially. Tax efficiency is not just about compliance — it is about returns.

FAQs About Tax on Investment Income in Nigeria

Do I pay tax on dividends in Nigeria?

Yes. Dividends are subject to 10% withholding tax, deducted at source by the paying company before the dividend reaches your account. For most individual investors, this WHT is the final tax — no additional computation or filing is required. You receive 90% of the declared dividend.

Is interest on FGN Bonds and Treasury Bills tax-free?

Yes. Interest income on FGN Bonds, FGN Savings Bonds, FGN Sukuk, and discount income on Treasury Bills is exempt from income tax under the NTA 2025. These are among the most tax-efficient fixed-income instruments available to Nigerian investors. No WHT is deducted on these instruments.

How much is capital gains tax in Nigeria?

Capital gains tax is levied at 10% on the net gain — disposal proceeds minus acquisition cost minus allowable incidental costs (brokerage, legal fees, stamp duty). There is no annual CGT-free allowance in Nigeria. Every naira of chargeable gain is taxable.

Do I have to pay CGT when I sell shares on the Nigerian Exchange?

Yes. The gain on disposal of listed shares is subject to 10% CGT. Unlike dividend and interest WHT, CGT is not deducted at source by your broker. You must self-assess the gain, compute the CGT, and include it in your annual tax return filed with your State IRS by 31 March.

Is cryptocurrency taxable in Nigeria?

Yes. The NTA 2025 explicitly brings digital assets within the tax framework. If you sell cryptocurrency at a profit, the gain is a chargeable gain subject to 10% CGT. The computation is the same as for shares: disposal proceeds minus acquisition cost minus transaction fees. Keep detailed records of every transaction across all exchanges and wallets.

Do I need to file a tax return for my investment income?

For dividends and interest where WHT has been deducted at source, individual investors generally do not need to file a separate return — the WHT is the final tax. For capital gains (shares, property, digital assets), you must self-assess and include the gain in your annual PIT return filed by 31 March. For foreign investment income, you must declare it in your annual return and claim credit for any foreign tax paid.

How can I reduce tax on my investment income?

Allocate more of your fixed-income portfolio to government securities (FGN Bonds, Treasury Bills), which are tax-exempt. Track and claim all incidental costs on disposals to reduce chargeable gains. Claim foreign tax credits on international investments. Use voluntary pension contributions (up to 20% of income) to reduce your overall PIT liability. And always compare after-tax yields — not gross yields — when choosing between investment options.