A report by KPMG Nigeria has stated that Nigeria’s newly gazetted tax laws, which became effective on January 1, 2026, contain certain provisions that could create compliance and operational challenges.
The laws also contain errors, inconsistencies, gaps, and omissions that could affect businesses and taxpayers, the organisation stated.
The report, which reviewed the Nigeria Tax Act and the Nigeria Tax Administration Act, alongside the Nigeria Revenue Service Establishment Act and the Joint Revenue Board Establishment Act, said: “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,” the report stated.
It noted that Section 3(b)&(c) of the NTA, which specifies taxable persons, omits “community”, creating uncertainty over whether communities are liable to pay tax.
“If the intention is to impose a tax on communities, this should be explicitly introduced in Section 3. Otherwise, the law should clearly state that communities are now exempt from tax,” the report said. Section 6(2) of the NTA was flagged for potentially taxing foreign dividends differently from domestic dividends.
“It thus appears that such dividends will be taxed at the income tax rate. Consequently, there will be differences in the treatment of dividends distributed by Nigerian companies and those distributed by foreign companies.”
KPMG also raised concerns that non-residents could face unclear obligations regarding tax registration and withholding taxes under Section 17(3)(b) and (c).
“Non-residents that do not have a permanent establishment or Significant Economic Presence should not be required to file tax returns. The law does not clearly exempt such companies, creating potential compliance challenges,” the report said.
Additionally, KPMG pointed out that Sections 20 and 21 of the NTA limit deductions on foreign currency expenses to the official Central Bank rate and disallow expenses on which VAT has not been charged.
“With the current state of the economy, focus should be on improving liquidity and introducing stricter reporting requirements to track and monitor foreign exchange transactions,” the organisation said.
KPMG opined that the highlighted gaps could affect tax compliance, planning, and financial reporting for both domestic and multinational companies operating in Nigeria. The firm recommended urgent clarification and amendments to ensure the laws achieve their stated objectives of fairness, efficiency, competitiveness, and revenue generation.
“Hopefully, the National Assembly’s release of the ‘certified’ Acts will put this matter to rest, but only time will tell,” the report added.
