KPMG has raised red flags over Nigeria’s newly enacted tax laws, warning that multiple drafting flaws could undermine their effectiveness and create avoidable disputes between taxpayers and the authorities.
In a detailed review of the New Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), both of 2025, the global professional services firm said it identified “errors, inconsistencies, gaps, omissions, and lacunae” that require urgent correction if the reforms are to meet their stated objectives of improving revenue mobilization while supporting economic growth.
KPMG’s critique of Nigeria’s new tax laws lands amid growing unease around the legitimacy and coherence of the reforms themselves, after recent revelations that the version of the Tax Act signed into law was not the same copy certified by the National Assembly.
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In recent days, tax practitioners and lawmakers have drawn attention to discrepancies between the bill passed by the National Assembly and the version later assented to, raising questions about post-legislative alterations. The discovery has intensified scrutiny of the laws and amplified concerns about transparency, legislative procedure, and legal certainty, particularly for businesses expected to comply with the new regime.
Against this backdrop, KPMG said several provisions of the NTA require urgent reconsideration if the government’s stated goals of improving revenue mobilization, simplifying administration, and supporting economic growth are to be achieved.
One of the firm’s early concerns is definitional ambiguity. Section 3(b) and (c) of the NTA specifies the persons on whom taxes may be imposed, but omits the term “community, even though communities are included elsewhere in the Act’s definition of a person. KPMG warned that the omission creates uncertainty over tax liability and enforcement, recommending that communities be explicitly included or clearly exempted to avoid interpretative disputes.
The firm also flagged the risk of double taxation embedded in Section 6(2) of the NTA, which deals with controlled foreign companies. According to KPMG, the Act provides that undistributed foreign profits should be “construed as distributed” while also requiring those profits to be included in the taxable profits of a Nigerian company. The wording, it said, implies that the same income could be taxed twice at the 30 percent corporate income tax rate unless the treatment of foreign and local dividends is clarified.
Administrative burdens on non-resident companies also drew criticism. KPMG argued that Section 6(1) of the NTAA should be amended to exempt non-resident companies whose income is already subject to final withholding tax from tax registration requirements. Such a change, it said, would align the provision with Section 11(3) of the same Act, which already exempts those companies from filing tax returns, and would reduce unnecessary compliance costs.
On withholding tax, the firm took issue with Section 17(3)(c) of the NTA, which requires Nigerian residents to deduct withholding tax on insurance premiums paid to non-residents. KPMG warned that the requirement could discourage cross-border transactions, raise costs for Nigerian businesses, and weaken competitiveness, recommending an exemption to support economic activity.
Foreign exchange treatment under the new law was another pressure point. KPMG advised removing the condition in Section 20(4) of the NTA that limits foreign exchange expense deductions to Central Bank of Nigeria rates. Rather than imposing restrictive benchmarks, the firm said policymakers should prioritize improving market liquidity and strengthening reporting and disclosure requirements.
The firm also called for the removal of Section 21(p) of the NTA, which restricts the deductibility of expenses linked to unpaid value-added tax. KPMG argued that expenses incurred wholly and exclusively for business purposes should remain deductible, warning that the current provision could unfairly penalize businesses and complicate tax computations.
Capital gains taxation is another area where KPMG sees a lack of clarity. It said Section 27 of the NTA does not clearly specify how capital losses should be deducted, leaving room for inconsistent interpretation by taxpayers and tax authorities.
On personal income tax, KPMG said the reforms fall short of easing the burden on individuals. It is recommended that Section 30 of the NTA retain the former consolidated personal allowance under the Personal Income Tax Act, adjusted for inflation. The current N500,000 rent relief, the firm said, is insignificant in the context of rising living costs and does little to promote fairness or voluntary compliance.
Beyond these headline issues, KPMG identified gaps across several other provisions of the NTA, including Sections 39, 40, 47, 63(4), 72, 162, 196, and 201, as well as parts of the First and Second Schedules. According to the firm, these weaknesses affect the computation of chargeable gains, the treatment of indirect transfers, the scope of tax exemptions, and the effectiveness of sector-specific incentives.
The firm also urged a review of Paragraphs 5 and 9 of the Second Schedule, the Ninth Schedule on stamp duties, the Twelfth Schedule covering partnerships and pensions, Sections 13, 22(2) and 22(9) of the NTAA, and Section 5 of the Joint Revenue Board Establishment Act, arguing that inconsistencies across these provisions undermine coherence in the broader tax framework.
In practical terms, KPMG proposed introducing a simplified certification process through the Tax-Pro Max platform to allow small companies to easily verify their status to counterparties. This, it said, would address recurring challenges faced by larger companies in confirming whether their business partners qualify as small companies for tax purposes.
The firm’s recommendations come as confidence in the reform process is tested by the controversy surrounding the altered assented copy of the Tax Act. Legal experts warn that unresolved discrepancies between the version passed by lawmakers and the version signed into law could expose the government to litigation and complicate enforcement, particularly where taxpayers challenge provisions that may not have been properly enacted.
KPMG called on the government to urgently reconcile all inconsistencies in the new tax laws, stressing that credibility, clarity, and legal certainty are just as important as revenue generation. It also advised businesses to carefully assess the impact of the laws on their operations and strengthen compliance systems and documentation in anticipation of closer scrutiny.
Overall, the firm’s review underscores the broader concern that without swift corrections and transparency around the legislative process, Nigeria’s ambitious tax overhaul risks being defined as much by controversy and confusion as by reform.