Global auditing firm, KPMG, has identified several gaps and inconsistencies in Nigeria’s newly enacted tax laws, warning that the issues could weaken the effectiveness of the ongoing tax reforms if left unaddressed.
The laws, introduced on the recommendation of the Presidential Fiscal Policy and Tax Reforms Committee, were designed to improve oversight of government revenue, streamline tax administration and align Nigeria’s system with global best practices. President Bola Tinubu assented to the legislation on June 26, 2025, with full implementation commencing on January 1, 2026.
The key statutes include the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), alongside the Nigeria Revenue Service Establishment Act and the Joint Revenue Board Establishment Act. Since their passage, however, the reforms have generated debate among tax experts and businesses.
In a newsletter titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” KPMG said the laws hold strong potential to boost government revenue if properly implemented, but stressed the need to balance revenue generation with sustainable economic growth.
Among the issues raised is ambiguity in the NTA over whether communities are subject to taxation, despite being included in the definition of a “person.” KPMG said the law should either clearly impose taxes on communities or expressly exempt them to avoid confusion.
The firm also flagged concerns over the treatment of foreign dividends under the controlled foreign company rules, noting that the current provisions could lead to unequal tax treatment between dividends from Nigerian companies and those from foreign entities. It recommended clearer guidance to prevent double taxation and uncertainty for investors.
On non-resident taxation, KPMG said the law does not clearly exempt non-residents without a permanent establishment or significant economic presence in Nigeria from tax registration and filing obligations, despite withholding tax being designated as final tax in such cases.
The firm further criticised provisions limiting tax deductions for foreign exchange expenses to official exchange rates and disallowing deductions for business expenses where VAT was not charged by suppliers, warning that such rules could unfairly penalise compliant businesses. KPMG urged regulators to urgently review these areas to ensure the reforms achieve their intended objectives without discouraging investment or economic activity.