Nigeria: Inside Tax : Issue 34 - Roll-Over Relief – A Real Escape From CGT?

Last Updated: 20 February 2014
Article by Yomi Olugbenro
Most Read Contributor in Nigeria, October 2018

It is a fact that different tax laws apply to income earned by different categories of taxpayers in Nigeria. Hence, Companies Income Tax Act imposes tax on the profits of Companies other than those engaged in petroleum exploration and production; Personal Income Tax Act imposes tax on the income of individuals, families and communities;and Petroleum Profits Tax Act and Deep Offshore And Inland Basin Production Sharing Contracts Act impose tax on the profits of companies engaged in Petroleum activities.

The Capital Gains Tax Act Cap C1, LFN 2007 (CGTA or the Act) imposes tax on gains accruing to any taxpayer on disposal of assets. It taxes such gains at the rate of 10%. 

Capital Gains Tax (CGT) is imposed on gains accruing to any taxpayer on disposal of assets. Capital gains are those gains that arise from an increase in the value of capital assets, that is, assets that were not purchased with the prime intention of immediate resale or exchange. When these gains are realized by sale, exchange or disposal of the asset for net amounts, which are more than the historical cost of the asset, CGT is triggered.

The Act refers to assets on which CGT is to be imposed as 'chargeable assets' and these include; options, debts, incorporeal property, currencies other than Naira, any form of property e.g. copyrights, buildings, chattels etc. Such assets are usually bought for use and are therefore not regularly offered for sale. On sale or disposal of such assets, an appreciation in its value becomes a realized capital gain. Capital gains tax is levied on an actual year basis and is calculated as the difference between the historical cost of acquisition of the asset and the net proceeds from the sale thereof. "Net sale proceeds" is the actual amount paid by the buyer less any cost incurred by the seller in order to make the sale a reality.

Section 32 (1) of the CGTA entitles a taxpayer to defer the CGT payable where it disposes of/exchanges certain business assets (i.e. assets used for the purpose of a trade or business) and replaces them with another asset of similar class for the purpose of the same business. This concept is known as 'roll-over relief'.

There are four classes of assets that qualify for roll-over relief stipulated by the CGTA as follows:

  • Class 1 – Land and building (subject to certain exceptions) and Plant or Machinery
  • Class 2 – Ship
  • Class 3 – Aircraft
  • Class 4 – Goodwill

The deferral could be on the entire gains or a portion of the gains. The conditions for granting the roll-over relief are as follows:

(a) if the asset disposed of was, until its sale, used for the purpose of the trade throughout the period of ownership;

(b) on acquisition, the new asset are used solely for the purposes of carrying out the trade as is the case with the old asset

c) acquisition of the new assets (or an unconditional contract for the acquisition of same) was done within twelve months before or twelve months after the disposal of the old asset. Where the old assets are disposed of in such circumstances that insurance proceeds are obtained and reinvested, the timeline for reinvestment in order to qualify for the relief is three years

(d) the old and new assets belong to the same class of assets

In practice, taxpayers are also required to formally notify the relevant Revenue Authority of its entitlement and claim of the relief. Considering the cash flow benefits involved, taxpayers typically show deep interest in 'roll-over relief'. Reinvestment can be in two forms namely: full and partial roll-over.

Where the taxpayer decides to reinvest the entire consideration derived from the sale of an old asset in the acquisition of new assets, it would be entitled to a full roll-over relief, if the above conditions are met. As such, there is a deferral of the CGT payable on the present transaction to a future period. The CGT would  crystallize eventually where the new asset purchased is eventually disposed of without being replaced by any other asset. The chargeable gains will be determined by deducting the historical cost of the old asset from the new sales proceeds.

However, where only a portion of the consideration derived from the sale of the old asset is reinvested, the applicability of roll-over relief would depend on the amount of the consideration being reinvested (partial roll-over relief). In all instances, for the roll over relief to be applicable, the conditions set out in 'a' to 'd' above must be present." CGT may also be deferred indefinitely. For instance, where a new asset (which was itself a replacement for an old one) is disposed of and the sales proceeds are again applied to replace the new assets, the full capital gains tax will be further deferred. The implication of this is that for a going concern, which only disposes of its business assets because they are old/obsolete and need to be replaced, capital gains tax on such assets will be deferred indefinitely. This is one of  the very bold incentives for continuous investments in Nigeria and investors need to be aware of it in order to maximize the benefits therein.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Yomi Olugbenro
In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions