Abstract

The substantial disposal of capital assets in Nigeria presents an opportunity for the capital gains tax to augment overall tax collection and spur economic growth. Thus, the influence of Nigeria's capital gains tax, rate of inflation, and economic growth were all investigated in the present study. The ex-post facto research design was utilized to accomplish this goal, and secondary data were gathered from the National Bureau of Statistics, CBN statistical bulletins, and annual publications of the Federal Inland Revenue Service. To determine the influence of the independent factors (capital gains tax, interest rate, and inflation rate) on the dependent variables (Gross Domestic Product) from 2003 to 2022, the autoregressive distributed lag was employed and examined using E-views 10. Outcomes indicated that Capital gain tax does not demonstrate a significant influence on economic growth. Inflation rate does not exhibit a significant effect on economic growth. It is recommended that the optimal balance between capital gains tax rates that generate government revenue and foster economic growth is crucial. Policymakers must strike a balance to ensure that tax policies incentivize investment and entrepreneurial activities while generating sufficient revenue to fund public services and programs. Understanding these dynamics on an international scale allows for comparisons of tax policies and identification of best practices to inform policy recommendations that promote economic growth and competitiveness. Accordingly, a thorough examination of the Capital Gains Tax Act is necessary to make sure it complies with international best practices and remains current with emerging economic indicators.