Globally renowned audit and advisory firm KPMG has raised the alarm over what it describes as major loopholes, inconsistencies and ambiguities in Nigeria’s newly enacted tax laws, warning that the issues could undermine investment confidence and trigger disputes between taxpayers and tax authorities.
In a detailed review of the Nigeria Tax Act and the Nigeria Tax Administration Act, both of which take effect from January 1, 2026, KPMG said several provisions contain drafting errors, omissions and unclear interpretations that may complicate compliance and enforcement.
According to the firm, one of the most critical gaps relates to ambiguity over who is legally liable to pay tax. While the law imposes tax obligations on individuals, companies, trustees and estates, it fails to explicitly list “communities” as taxable persons, even though communities are defined elsewhere as “persons.” KPMG warned that this contradiction could fuel legal disputes unless urgently clarified.
The firm also highlighted confusion surrounding the taxation of non-residents. It noted that the new laws are unclear on whether non-resident entities without a Permanent Establishment or Significant Economic Presence in Nigeria are required to register for tax, even where taxes are already deducted at source. KPMG said this uncertainty could impose unnecessary compliance burdens and discourage foreign participation in the Nigerian economy.
On investment-related income, KPMG pointed out possible unequal treatment between dividends earned from Nigerian companies and those received from foreign companies, a situation it said could distort investment decisions and weaken Nigeria’s competitiveness as an investment destination.
The advisory firm further criticised provisions restricting the deductibility of foreign exchange expenses to official Central Bank rates, warning that businesses operating at higher market rates could be unfairly penalised. Similarly, it faulted sections that disallow deductions for legitimate business expenses simply because VAT was not charged by suppliers, arguing that taxpayers should not suffer for compliance failures beyond their control.
KPMG also drew attention to gaps in capital gains taxation, particularly the absence of clear rules on the treatment of capital losses and the failure to adjust gains for inflation, which it said could result in artificially high tax liabilities.
In its assessment, the firm warned that unless these issues are addressed through urgent legislative amendments, the new tax framework could lead to increased litigation, higher compliance costs, reduced investor confidence and even capital flight.
KPMG urged lawmakers and tax authorities to swiftly review and refine the laws to ensure clarity, fairness and alignment with global best practices, stressing that certainty in tax policy is critical to achieving Nigeria’s revenue and economic growth objectives.
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