KPMG, a global professional services firm, has raised concerns over what it describes as numerous errors, inconsistencies, omissions and grey areas in Nigeria’s new tax laws, warning that these flaws could undermine the laws’ stated objectives unless urgently reviewed.

In a newsletter released after examining the New Tax Act (NTA), 2025, the firm highlighted several provisions requiring amendments to improve clarity, coherence and effectiveness.

KPMG noted that while Section 3(b) and (c) of the NTA identifies persons liable to taxation, it fails to mention ‘communities,’ even though the term is captured under the Act’s definition of a ‘person.’

The firm advised that communities should either be expressly included or clearly exempted from tax obligations to eliminate uncertainty. KPMG also pointed to potential double taxation risks under Section 6(2) of the NTA, which deals with controlled foreign companies, recommending changes to clarify how foreign and local dividends should be treated.

It explained that the Act deems undistributed foreign profits as ‘distributed’ while simultaneously requiring such income to be included in the profits of Nigerian companies, effectively subjecting it to a 30 percent income tax.

Tax registration exemption for non-resident companies

According to KPMG, Section 6(1) of the Nigeria Tax Administration Act (NTAA), 2025, should be revised to exempt non-resident companies whose income is already subject to final withholding tax from mandatory tax registration.

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The firm said this amendment would bring the provision in line with Section 11(3) of the NTAA, which already excuses such companies from filing tax returns.

On withholding tax (WHT), KPMG recommended that Section 17(3)(c) of the NTA be amended to exempt insurance premiums paid to non-resident insurers, arguing that the existing requirement for Nigerian residents to deduct WHT discourages competitiveness and economic activity.

The firm further suggested deleting the provision in Section 20(4) of the NTA that restricts foreign exchange (FX) expense deductions to Central Bank of Nigeria (CBN) rates, urging authorities instead to focus on boosting liquidity and enhancing reporting standards.

KPMG also proposed removing Section 21(p) of the NTA, maintaining that business expenses should qualify for tax deductions if they are wholly and exclusively incurred for business purposes, regardless of whether value-added tax (VAT) has been paid.

On capital losses, the firm called for a clearer framework under Section 27 of the NTA, noting that the current wording does not adequately explain how such losses should be treated for tax purposes.

Addressing personal income tax, KPMG recommended that Section 30 of the NTA retain the previous consolidated personal allowance under the Personal Income Tax Act (PITA), with adjustments for inflation.

It added that the N500,000 rent relief currently provided is too minimal to meaningfully ease taxpayers’ burden or encourage voluntary compliance.

The firm also identified shortcomings in Sections 39, 40, 47, 63(4), 72, 162, 196 and 201 of the NTA, as well as provisions in the First and Second Schedules, urging a comprehensive review to enhance clarity and operational efficiency.

KPMG further said its proposed changes would help resolve issues around the calculation of chargeable gains, indirect asset transfers, tax exemptions and industry-specific incentives.

Further recommendations included revisiting 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 (JRBEA).

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The firm also called for the introduction of a simplified certification process on the Tax-Pro Max platform to allow small businesses to easily confirm their tax status to counterparties.

Overall, KPMG urged the government to resolve inconsistencies across the new tax framework to balance revenue mobilisation with sustainable economic growth, while advising businesses to carefully evaluate the implications of the laws and strengthen their compliance and documentation processes.

In July 2025, President Bola Tinubu appended his signature on four tax bills: the Nigeria Tax Bill 2024, the Nigeria Tax Administration Bill 2024, the Nigeria Revenue Service (Establishment) Bill 2024, and the Joint Revenue Board of Nigeria (Establishment) Bill 2024.