By Martin Ekpeke
As Nigeria transitions to a new fiscal era, KPMG Advisory Services has raised significant concerns regarding the country’s recently implemented tax framework. While the firm acknowledges the potential for increased revenue, it warns that “inherent errors, inconsistencies, gaps, and omissions could stifle economic growth and hinder the very objectives the laws were designed to achieve.
The suite of legislation, which includes the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), became effective on January 1, 2026. However, the rollout has already been marred by confusion. Discrepancies between the bills passed by the National Assembly and the versions eventually gazetted forced the legislature to release “certified” copies of the Acts earlier this month.
Adewale Ajayi, a Partner at KPMG, emphasized that while tax reform is necessary for equity and competitiveness, the current legal language contains lacunae that require immediate government intervention.
“There are certain errors, inconsistencies, gaps, omissions, and lacunae in the new tax laws that need to be urgently reconsidered to ensure the attainment of the stated objectives,” Ajayi stated in the firm’s recent analysis.
KPMG’s review highlighted 31 specific issues ranging from simple drafting errors to deep-seated policy contradictions. Key highlights include:
- Section 20(4) of the NTA restricts tax deductions for foreign expenses to the official CBN exchange rate. KPMG warns that this ignores the reality of forex scarcity, effectively penalizing businesses that must source currency at higher market rates.
- While “communities” are defined as taxable persons in one section, they are omitted from the charging section (Section 3). KPMG recommends that the law explicitly state whether communities are taxed or exempt.
- The firm noted that the 30% tax on capital gains from asset sales, without adjustments for inflation, could trigger a massive “sell-off” in the stock market and discourage long-term entrepreneurship.
- For individual taxpayers, the NTAA mandates annual filings and imposes stiff penalties for defaults (up to ₦100,000), yet the law fails to specify an actual submission deadline.
- Contradictions exist between the new Acts and existing 2024 regulations regarding Withholding Tax (WHT) and VAT on insurance premiums, creating a “risk of dispute” for the financial sector.
KPMG also aimed the Joint Revenue Board, noting that its current membership consists entirely of government employees. The firm argued that the board lacks the independence necessary to provide unbiased financial analysis.
“What is required is an independent watchdog in the mould of the Office for Budget Responsibility (OBR) in the United Kingdom,” the firm suggested, proposing that the body be made accountable to the National Assembly rather than just the executive branch.
As the 2026 tax year begins, KPMG is advising Nigerian companies to conduct a comprehensive analysis of their tax footprints.
“Businesses should conduct a detailed evaluation to manage undue exposures and ensure compliance,” Ajayi noted. He further recommended that finance departments update their ERP systems and payroll configurations immediately to align with the new rates and e-invoicing requirements.
The government has yet to provide an official response to the specific recommendations, though the recent release of “certified” Acts suggests the National Assembly is aware of the mounting pressure for clarity.