KPMG, globally renowned auditing firm with expertise on tax services, says it has identified loopholes in the new tax laws.
The Presidential Fiscal Policy and Tax Reforms Committee had said it proposed the laws to provide better oversight on government revenues, and streamline tax administration in Nigeria to bring it closer to best practices globally and improve efficiencies in tax administration.
However, since President Bola Tinubu assented to the laws on June 26, 2025, there have been different forms of controversies surrounding them, reports Daily Trust.
The laws – the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA) – became effective on January 1, 2026.
Other are – the Nigeria Revenue Service Establishment Act (NRSEA) and the Joint Revenue Board Establishment Act (JRBEA) – which had become effective since June 26, 2025, were activated on January 1, 2026.
In a newsletter titled, “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions”, KPMG called for urgent reviews to ensure the attainment of the tax reform objectives.
The piece said if well implemented, there are many provisions in the laws that would result in increased revenue for the government.
But it laid emphasis on the need to strike a balance between revenue generation and sustainable growth.
“Section 3(b)&(c) of the NTA – Imposition of tax – Error/Gap – The section specifies persons on
whom taxes should be levied, including individuals, families, companies or enterprises, trustees,
and an estate, but omits ‘community.’ However, community’ is included in the definition of ‘person’.”
Under Section 201
“Recommendation – If the intention is to impose tax on communities, this should be explicitly introduced in Section 3. Otherwise, the law should clearly state that communities are now exempt from tax.
Section 6(2) of the NTA – Controlled foreign companies (CFC) Error/Gap – The Act states that undistributed foreign profits are to be ‘construed as distributed’ but also mandates that they be “included in the profits of the Nigerian company” (implying income tax at 30%).
Though dividend distributed by a Nigerian company is deemed to be franked
investment income, this does not appear to be the case with dividends distributed by foreign
It thus appears that such dividends will be taxed at the income tax rate. Consequently, there will be differences in the treatment of dividends distributed by Nigerian companies and those distributed by foreign companies.
KPMG in its latest newsletter titled, “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions”, reaffirmed the potential of the laws to transform tax administration in the country.
Recommendation – Modify the section by providing clarity on the treatment of foreign and
local dividends.”
Citing an error/gap in Section 17(3) (b) of the NTA which bothered on taxation of non-resident persons, KPMG recommended that Section 6(1) of the NTAA should be updated to include not only non-residents that derive passive income from investments in Nigeria but also income in which the deduction at source is the final tax.
This, it stated, would clearly absolve non-residents from the tax registration requirement where they have no Permanent Establishment (PE) or Significant Economic Presence (SEP) in the country.