iDeemlawful—KPMG, the global audit and tax advisory firm, says it has uncovered several loopholes and inconsistencies in Nigeria’s newly introduced tax laws.
In a newsletter released after reviewing the New Tax Act (NTA) 2025, the firm identified multiple provisions it believes require urgent amendment.
According to KPMG, Sections 3(b) and (c) of the NTA list taxable persons but exclude the word “community,” even though it appears in the Act’s definition of a “person.”
The firm advised that communities should either be expressly included or clearly exempted from taxation to remove uncertainty.
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KPMG also pointed out that Section 6(2) of the NTA, which deals with controlled foreign companies, could expose taxpayers to double taxation, recommending clearer rules on how foreign and domestic dividends should be treated.
The firm noted that the Act describes undistributed foreign profits as being “construed as distributed” while also requiring them to be “included in the profits of the Nigerian company,” effectively subjecting them to income tax at 30 percent.‘
TAX REGISTRATION EXEMPTION NEEDED FOR NON-RESIDENT COMPANIES’
KPMG said 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.
It explained that this change 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, the firm recommended amending Section 17(3)(c) of the NTA to exempt insurance premiums paid to non-residents, arguing that the current requirement discourages competitiveness and economic growth.
KPMG further suggested removing the condition in Section 20(4) of the NTA that restricts foreign exchange expense deductions to Central Bank of Nigeria (CBN) rates.
Instead, it proposed prioritising improved liquidity and stronger reporting standards.
The firm also advised deleting Section 21(p) of the NTA, arguing that business expenses should remain tax-deductible if incurred wholly and exclusively for business purposes, regardless of unpaid value-added tax (VAT).
Regarding capital losses, KPMG said Section 27 of the NTA should be clarified to explain how such losses are to be deducted, noting that the current wording is vague.
On personal income tax, the firm recommended retaining the former consolidated personal allowance under the Personal Income Tax Act (PITA), adjusted for inflation, within Section 30 of the NTA.
It described the current N500,000 rent relief as inadequate, saying it fails to properly balance individual tax burdens or encourage voluntary compliance.
KPMG also highlighted further gaps in Sections 39, 40, 47, 63(4), 72, 162, 196 and 201 of the NTA, as well as parts of the First and Second Schedules, calling for broader reviews to enhance clarity and effectiveness.
The firm said addressing these areas would resolve issues around chargeable gains calculations, indirect transfers, tax exemptions and industry-specific incentives.
It additionally called for amendments to Paragraphs 5 and 9 of the Second Schedule, the Ninth Schedule on stamp duties, the Twelfth Schedule on partnerships and pensions, Sections 13, 22(2) and 22(9) of the NTAA, and Section 5 of the Joint Revenue Board Establishment Act (JRBEA).
KPMG also proposed introducing a simplified certification process through Tax-Pro Max to help small companies easily confirm their status to business partners.
According to the firm, this would ease difficulties faced by larger organisations in verifying whether counterparties qualify as “small companies.”
The firm urged the government to address all inconsistencies in the new tax framework to strike a balance between revenue mobilisation and sustainable economic growth, while advising businesses to assess the laws’ impact on operations and strengthen compliance and documentation.
The Presidential Fiscal Policy and Tax Reforms Committee has said the laws were designed to improve oversight of government revenue and modernise tax administration in line with global best practices.
President Bola Ahmed Tinubu signed the laws into effect on June 26, 2025.The Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA) became operational on January 1, 2026.
Other related laws — the Nigeria Revenue Service Establishment Act (NRSEA) and the Joint Revenue Board Establishment Act (JRBEA) — which were signed on June 26, 2025, were also activated on January 1, 2026.