**Nigeria's New Tax Law: A Potential Roadblock for Foreign Investors** In recent years, Nigeria has been a hub for startups and innovation, attracting foreign venture capital (VC) investors who seek to tap into the country's vast market potential. However, the introduction of a new tax law, the Nigeria Tax Act (NTA) 2025, may slow down investment in the country's startup ecosystem. Several VC executives have expressed concerns that the changes will make Nigeria less attractive to foreign investors. The new tax law raises capital gains tax for companies from 10% to as high as 30%, and introduces an "economic nexus" rule that allows Nigerian authorities to tax offshore share sales if more than half of the underlying value is derived from Nigerian assets. This means that foreign investors who sell shares in Nigerian companies may be subject to a higher tax burden, which could reduce their returns and make Nigeria less competitive compared to other African markets. The changes come at a time when foreign funds already face limited exit pathways, liquidity constraints, and macroeconomic volatility before investing in Nigerian startups. According to Segun Cole, CEO of Maasai VC, a mergers and acquisitions Software-as-a-Service platform and marketplace, the new tax law means that founders need to ensure their exit valuation is 20% higher just to give their investors the same net return they expected in 2024. The previous tax regime largely shielded offshore share disposals from Nigerian taxation, but the new law removes this shield and introduces a 50% value test. If more than half of the value of the shares being disposed of is derived from Nigerian assets, the shares are deemed situated in Nigeria, and the gain becomes taxable locally. This change will make it more complex for venture funds to navigate cross-border exits, and may discourage foreign investors from putting their money in Nigerian startups. The implication of these changes is that Nigeria may lose out on foreign investment to other African markets, such as Kenya or Egypt, which have more competitive exit taxes. As Cole pointed out, the 30% "toll gate" at the exit may make Nigeria less attractive to foreign investors. The government's intention to bring in more revenue may have unintended consequences, and it remains to be seen how this new tax law will impact the country's startup ecosystem.