The Managing Director/Chief Executive Officer of Arthur Stevens Asset Management Limited, Mr Tunde Amolegbe, has stated that Nigeria’s proposed 25 per cent capital gains tax on investment profits could play a crucial role in reducing market volatility and discouraging speculative “hot money” flows, particularly from foreign investors.Amolegbe said this on Friday at the 2026 Macroeconomic Outlook event organised by the Capital Market Correspondents Association of Nigeria in Lagos.Under the Nigeria Tax Act, the capital gains tax rate for companies has been changed from a flat 10 per cent to a progressive income tax rate ranging from 0 per cent to 30 per cent, depending on the investor’s overall income or profit level. The top rate of 30 per cent, which applies to large corporate investors, is expected to be reduced to 25 per cent under the broader corporate tax reform.Amolegbe argued that while the tax reform has generated concerns among market participants, its long-term implications could be structurally positive for the Nigerian capital market. “What the capital gains tax reform is doing is forcing investors, especially foreign investors, to be more strategic. When you know that selling attracts a 25 per cent tax, you will think twice about coming in just for a short-term trade. That, in itself, is not a bad thing for the Nigerian market.”According to Amolegbe, before the proposed reform, foreign portfolio investors were able to enter and exit the Nigerian market with relative ease, often without regard for the broader impact on market stability.“Before now, foreign investors could come in easily and exit easily without really caring about the impact on the general market,” he noted. “But once you introduce a meaningful capital gains tax, the behaviour changes. Investors have to ask themselves whether it makes sense to sell quickly or stay invested longer.”He explained that this shift in behaviour could significantly reduce sharp market swings typically associated with sudden inflows and outflows of foreign funds.“It reduces volatility because you are no longer attracting only portfolio investors who are here for a few months. You begin to attract investors who are willing to stay for a few years because they want to make enough returns to comfortably absorb that tax,” Amolegbe said.