The firm disclosed this in a newsletter titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions”, released following the commencement of the laws on January 1, 2026.
The tax reforms, proposed by the Presidential Fiscal Policy and Tax Reforms Committee, were designed to strengthen oversight of government revenues, streamline tax administration and align Nigeria’s tax system with global best practices. President Bola Tinubu signed the bills into law on June 26, 2025.
The key legislations include the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), which became effective in January 2026, as well as the Nigeria Revenue Service Establishment Act (NRSEA) and the Joint Revenue Board Establishment Act (JRBEA), which were activated on the same date.
However, KPMG noted that despite the potential of the laws to significantly boost government revenue if properly implemented, several provisions contain errors, omissions and ambiguities that could undermine effective tax administration.
One of the issues highlighted relates to Section 3(b) and (c) of the NTA on the imposition of tax. KPMG observed that while the section lists individuals, families, companies, trustees and estates as taxable persons, it omits “communities,” even though communities are included in the law’s definition of a “person.”
The firm recommended that if communities are intended to be taxed, this should be explicitly stated in the law; otherwise, the legislation should clearly exempt them.
KPMG also raised concerns over Section 6(2) of the NTA dealing with controlled foreign companies (CFCs).
According to the firm, the provision could result in foreign dividends being taxed at a higher rate than dividends from Nigerian companies, leading to unequal treatment and potential double taxation.
On taxation of non-resident persons, KPMG identified gaps between Sections 17 of the NTA and Section 6(1) of the NTAA, noting that non-residents without a Permanent Establishment (PE) or Significant Economic Presence (SEP) in Nigeria could still be required to register for tax, contrary to the apparent intention of the law.
The firm recommended amendments to clearly exempt such non-residents from tax registration and filing obligations where withholding tax is deemed final.
KPMG further criticised provisions restricting tax deductions for foreign currency expenses to the official exchange rate published by the Central Bank of Nigeria (CBN). It warned that businesses sourcing foreign exchange at higher market rates would be unfairly penalised and advised that current economic realities, including forex supply challenges, should be considered.
Additionally, the firm flagged Section 21 of the NTA, which disallows tax deductions for expenses on which Value Added Tax (VAT) was not charged, even where such expenses were legitimately incurred for business purposes. KPMG cautioned that this could unfairly punish companies for failures attributable to their suppliers.
Despite the concerns, KPMG reaffirmed that the new tax laws have the potential to transform Nigeria’s tax system if the identified gaps are addressed and the reforms are implemented with a balance between revenue generation and sustainable economic growth.
