GLOBAL audit and tax advisory firm KPMG has raised concerns over what it described as major loopholes and inconsistencies in Nigeria’s newly enacted tax laws, urging the government to urgently review the legislation to achieve its reform objectives.
The firm made this known in a newsletter titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” released following the commencement of the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA) on January 1, 2026.
Other related laws — the Nigeria Revenue Service Establishment Act and the Joint Revenue Board Establishment Act — had earlier taken effect from June 26, 2025, but were also activated at the start of the year.
While acknowledging that the reforms, if properly implemented, could significantly boost government revenue and modernise tax administration, KPMG warned that several provisions require clarification to prevent unintended consequences and ensure sustainable economic growth.
Among the issues identified is a contradiction in Section 3 of the NTA, which lists entities subject to taxation but omits “communities,” despite including them under the law’s definition of a “person.”
KPMG advised that the law should either explicitly include communities as taxable entities or clearly exempt them to avoid ambiguity.
The firm also highlighted concerns around the treatment of undistributed profits of controlled foreign companies, noting that the current wording could result in unequal tax treatment between dividends from Nigerian companies and those from foreign firms. It recommended clearer provisions on how local and foreign dividends should be taxed.
On non-resident taxation, KPMG pointed to gaps that could inadvertently compel non-resident companies without a permanent establishment or significant economic presence in Nigeria to register for tax, contrary to the apparent intent of the law.
The firm suggested aligning the relevant sections to explicitly exempt such entities from tax registration and filing obligations.
KPMG further criticised provisions restricting tax deductions on foreign exchange transactions to official Central Bank rates, warning that this could unfairly penalise businesses sourcing forex at higher market rates amid supply constraints.
It argued that improving liquidity and strengthening reporting requirements would be more effective than such restrictions.
Another concern raised relates to expenses on which VAT was not charged. Under the current framework, such expenses may be disallowed as tax deductions, potentially punishing businesses for the failures of their suppliers or service providers.
Despite these shortcomings, KPMG reaffirmed that Nigeria’s new tax framework has the potential to transform revenue generation and administration if the identified gaps are addressed promptly and thoughtfully.