KPMG’s early review of Nigeria’s new tax regime has exposed the risks inherent in pushing through sweeping reforms without sufficient technical vetting and stakeholder alignment.
In a newsletter titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” the global audit and tax advisory firm identified multiple loopholes in the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), raising questions about whether the laws were fully ready for rollout when they took effect on January 1, 2026.
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The firm acknowledged that the reforms, championed by the Presidential Fiscal Policy and Tax Reforms Committee and signed into law by President Bola Tinubu on June 26, 2025, have the potential to boost government revenue and modernise tax administration.
However, KPMG warned that poor drafting choices, internal contradictions and unaddressed economic realities could undermine those objectives if left unresolved.
Drafting gaps, legal ambiguity and economic blind spots
KPMG’s analysis shows that some of the problems are fundamental drafting issues.
For instance, Section 3 of the NTA, which specifies persons on whom tax may be imposed, omits “community” despite the term being included in the law’s definition of a “person.” According to the firm, this creates uncertainty over whether communities are taxable entities, a question that should have been clearly settled in the primary charging provision.
Other concerns point to deeper policy and coherence problems. Under the controlled foreign company provisions, KPMG noted inconsistencies in how undistributed foreign profits and dividends are treated, potentially leading to unequal tax treatment between dividends from Nigerian companies and those from foreign companies. The firm also flagged ambiguity around tax registration requirements for non-resident entities with no permanent establishment or significant economic presence in Nigeria, warning that the current wording could impose compliance obligations that the law itself does not appear to intend.
Beyond legal clarity, KPMG questioned whether some provisions reflect current economic realities. The rule limiting deductibility of foreign-currency expenses to the official Central Bank of Nigeria exchange rate, for example, may penalise companies that source forex at higher market rates due to liquidity constraints. While the policy aim may be to discourage speculation and support the naira, KPMG argued that supply-side constraints in the forex market were not fully considered, making the provision potentially counterproductive.
Revenue drive versus business certainty
A recurring theme in KPMG’s review is the tension between aggressive revenue mobilisation and the need for sustainable growth. The firm cautioned that denying tax deductions for valid business expenses simply because suppliers failed to charge VAT could unfairly transfer compliance failures down the value chain, leaving compliant companies exposed to higher tax burdens through no fault of their own.
Such provisions, KPMG suggested, may raise short-term revenue but at the cost of legal certainty, investor confidence and ease of doing business. Its call for urgent reviews reflects concern that, without prompt corrections, disputes and litigation could proliferate, weakening the efficiency gains the reforms were meant to deliver.
From technical warnings to political calls for suspension
KPMG’s technical findings reinforce a broader national debate that had already erupted before implementation, with lawyers, politicians and civil society groups calling for a pause in enforcement of the new tax laws. The Nigerian Bar Association, opposition figures such as former Vice-President Atiku Abubakar, and several federal lawmakers had urged suspension, citing alleged discrepancies between the versions passed by the National Assembly and those gazetted, as well as inadequate public consultation.
While those calls were framed largely around legality and process, KPMG’s intervention highlights the policy costs of speed over scrutiny.
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Taken together, the professional critique and the political objections suggest that the controversy surrounding the new tax laws is not merely partisan noise, but a warning about the dangers of rushed implementation in a complex and fragile economy.
Philip Ibitoye is a Special Correspondent with EKO HOT BLOG. Click here to find daily analysis and critical insight on trending issues in Lagos and other parts of Nigeria.
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