Economy
What is Capital Gains Taxation and How to Optimize it?
If you have ever traded any securities on the capital markets, chances are that you have paid capital gains taxes before, provided the country of your residence levies such taxes.
Capital gains taxes are levied on the profit generated by buying and selling a particular asset or financial security.
For example, if an investor buys 10 Apple stock for $200 per share and then sells the entire investment for $220 per share, the taxable profit is $200.
Taxes on FX gains are levied at different rates, depending on the length of the holding period of the investment. Long-term capital gains taxes are levied after at least 12 months of holding an asset, while anything less is treated as a short-term capital gain.
In order to better understand how capital gains taxes work and how to optimize your strategies against them, we can look at several examples below.
Example 1 – Long-term capital gains tax
Long-term capital gains taxes in the United States are levied at a rate of 0%, 15%, or 20%, based on income levels and filing status.
Typically, long-term capital gains taxes are levied on asset sales after at least 12 months from purchase. Therefore, if an investor sells an asset 2 years after purchase, the profit will be treated as a long-term capital gain and taxed accordingly.
In other countries, long-term capital gains may have a flat tax rate. For instance, France upholds a long-term capital gains tax of 30%, regardless of the type of instrument.
Example 2 – Short-term capital gains tax
If we look at an example of short-term capital gains taxation, we can see that short-term gains are much easier in terms of tax handling, particularly in the United States, where short-term capital gains are taxed at the ordinary federal and state income tax rates.
For example, if an investor buys $100,000 worth of shares and sells them at a 10% profit in 6 months, the $10,000 difference would be taxable at a rate of 22%, assuming the investor has no other sources of income.
In general, the federal taxes levied on short-term capital gains range from 10% to 37%, with an additional state tax based on place of residence.
Are capital gains taxes universal?
Similarly to any other type of tax levied by governments, capital gains taxes can differ considerably based on the jurisdiction where you reside.
For example, short-term capital gains taxes in the United States are charged at the ordinary income levels, which means that the taxes on short-term capital gains are levied at rates between 10% on the lower end and 37% on the higher end.
On the other hand, a number of countries do not charge capital gains taxes at all. Some such jurisdictions include: Switzerland, Singapore, the UAE, Monaco, Malaysia, Belgium, New Zealand, and more.
In most cases capital gains taxes are levied at income tax levels, while in some cases, they are entirely separate and taxed at a separate, but smaller, rate.
Optimizing your capital gains tax
A key difference between capital gains and other taxes is that capital gains taxes can be optimized, leading to a smaller tax burden overall.
There are several ways of optimizing your capital gains taxes, especially if you reside in the United States and have a SSN, as a number of tax-advantaged investment accounts are available to US residents and citizens, such as: The 401(k), Roth IRAs and Regular IRAs.
In the United Kingdom, you can choose an Individual Savings Account, or ISA. These accounts allow you to close your investments tax-deferred, meaning you do not have to pay capital gains taxes when using them.
Another strategy you can use is tax-loss harvesting, which is done by selling losing investments to offset taxable capital gains. If losses exceed gains, many jurisdictions allow to carry forward excess losses to future years. However, it is also worth noting that tax-loss harvesting can only be done up to $3,000 in the United States.
Conclusion
Capital gains taxes are levied on the profit generated by buying and selling financial securities and other assets.
The rates of capital gains tax differ considerably between jurisdictions and some countries do not levy capital gains taxes at all.
In general, there are two types of capital gains taxes – Short-term and longterm. In most cases, short-term capital gains are taxed as ordinary income, while long-term capital gains taxes are treated as a distinct subcategory of income tax.
For those seeking to optimize their capital gains taxation to avoid overpaying, they can use strategies, such as tax-loss harvesting up to a certain point, or invest and trade using a IRA or other tax-deferred investment/savings account.
By Adedapo Adesanya
The United Kingdom via the British High Commission in Abuja has launched two flagship economic reform programmes – the Nigeria Economic Stability & Transformation (NEST) programme and the Nigeria Public Finance Facility (NPFF) -as part of efforts to support Nigeria’s economic reform and growth agenda.
Backed by a £12.4 million UK investment, NEST and NPFF sit at the centre of the UK-Nigeria mutual growth partnership and support Nigeria’s efforts to strengthen macroeconomic stability, improve fiscal resilience, and create a more competitive environment for investment and private-sector growth.
Speaking at the launch, Cynthia Rowe, Head of Development Cooperation at the British High Commission in Abuja, said, “These two programmes sit at the heart of our economic development cooperation with Nigeria. They reflect a shared commitment to strengthening the fundamentals that matter most for our stability, confidence, and long-term growth.”
The launch followed the inaugural meeting of the Joint UK-Nigeria Steering Committee, which endorsed the approach of both programmes and confirmed strong alignment between the UK and Nigeria on priority areas for delivery.
Representing the Government of Nigeria, Special Adviser to the President of Nigeria on Finance and the Economy, Mrs Sanyade Okoli, welcomed the collaboration, touting it as crucial to current, critical reforms.
“We welcome the United Kingdom’s support through these new programmes as a strong demonstration of our shared commitment to Nigeria’s economic stability and long-term prosperity. At a time when we are implementing critical reforms to strengthen fiscal resilience, improve macroeconomic stability, and unlock inclusive growth, this partnership will provide valuable technical support. Together, we are laying the foundation for a more resilient economy that delivers sustainable development and improved livelihoods for all Nigerians.”
On his part, Mr Jonny Baxter, British Deputy High Commissioner in Lagos, highlighted the significance of the programmes within the wider UK-Nigeria mutual growth partnership.
“NEST and NPFF are central to our shared approach to strengthening the foundations that underpin long-term economic prosperity. They sit firmly within the UK-Nigeria mutual growth partnership.”
By Aduragbemi Omiyale
A strategic partnership aimed at accelerating the growth, digital capacity, and sustainability of Nigeria’s 40 million Micro, Small and Medium Enterprises (MSMEs) has been signed by MTN Nigeria and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
The collaboration will feature joint initiatives focused on digital inclusion, financial access, capacity building, and providing verified information for MSMEs.
With millions of small businesses depending on accurate guidance and easy-to-access support, MTN and SMEDAN say their shared platform will address gaps in communication, misinformation, and access to opportunities.
At the formal signing of the Memorandum of Understanding (MoU) on Thursday, November 27, 2025, in Lagos, the stage was set for the immediate roll-out of tools, content, and resources that will support MSMEs nationwide.
The chief operating officer of MTN Nigeria, Mr Ayham Moussa, reiterated the company’s commitment to supporting Nigeria’s economic development, stating that MSMEs are the lifeline of Nigeria’s economy.
“SMEs are the backbone of the economy and the backbone of employment in Nigeria. We are delighted to power SMEDAN’s platform and provide tools that help MSMEs reach customers, obtain funding, and access wider markets. This collaboration serves both our business and social development objectives,” he stated.
Also, the Chief Enterprise Business Officer of MTN Nigeria, Ms Lynda Saint-Nwafor, described the MoU as a tool to “meet SMEs at the point of their needs,” noting that nano, micro, small, and medium businesses each require different resources to scale.
“Some SMEs need guidance, some need resources; others need opportunities or workforce support. This platform allows them to access whatever they need. We are committed to identifying opportunities across financial inclusion, digital inclusion, and capacity building that help SMEs to scale,” she noted.
Also commenting, the Director General of SMEDAN, Mr Charles Odii, emphasised the significance of the collaboration, noting that the agency cannot meet its mandate without leveraging technology and private-sector expertise.
“We have approximately 40 million MSMEs in Nigeria, and only about 400 SMEDAN staff. We cannot fulfil our mandate without technology, data, and strong partners.
“MTN already has the infrastructure and tools to support MSMEs from payments to identity, hosting, learning, and more. With this partnership, we are confident we can achieve in a short time what would have taken years,” he disclosed.
Mr Odii highlighted that the SMEDAN-MTN collaboration would support businesses across their growth needs, guided by their four-point GROW model – Guidance, Resources, Opportunities, and Workforce Development.
He added that SMEDAN has already created over 100,000 jobs within its two-year administration and expects the partnership to significantly boost job creation, business expansion, and nationwide enterprise modernisation.
By Adedapo Adesanya
The Nigerian Exchange (NGX) Limited is seeking review of the controversial Capital Gains Tax increase, fearing it will chase away foreign investors from the country’s capital market.
Nigeria’s new tax regime, which takes effect from January 1, 2026, represents one of the most significant changes to Nigeria’s tax system in recent years.
Under the new rules, the flat 10 per cent Capital Gains Tax rate has been replaced by progressive income tax rates ranging from zero to 30 per cent, depending on an investor’s overall income or profit level while large corporate investors will see the top rate reduced to 25 per cent as part of a wider corporate tax reform.
The chief executive of NGX, Mr Jude Chiemeka, said in a Bloomberg interview in Kigali, Rwanda that there should be a “removal of the capital gains tax completely, or perhaps deferring it for five years.”
According to him, Nigeria, having a higher Capital Gains Tax, will make investors redirect asset allocation to frontier markets and “countries that have less tax.”
“From a capital flow perspective, we should be concerned because all these international portfolio managers that invest across frontier markets will certainly go to where the cost of investing is not so burdensome,” the CEO said, as per Bloomberg. “That is really the angle one will look at it from.”
Meanwhile, the policy has been defended by the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, who noted that the new tax will make investing in the capital market more attractive by reducing risks, promoting fairness, and simplifying compliance.
He noted that the framework allows investors to deduct legitimate costs such as brokerage fees, regulatory charges, realised capital losses, margin interest, and foreign exchange losses directly tied to investments, thereby ensuring that they are not taxed when operating at a loss.
Mr Oyedele also said the reforms introduced a more inclusive approach to taxation by exempting several categories of investors and transactions.
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