Global advisory firm KPMG Nigeria has flagged multiple errors inconsistencies gaps omissions and lacunae in the newly gazetted Nigeria Tax Act effective January 1 2026 urging urgent government review to achieve reform objectives.
The firm analyzed the Nigeria Tax Act Nigeria Tax Administration Act Nigeria Revenue Service Establishment Act and Joint Revenue Board Establishment Act highlighting provisions risking compliance challenges operational disruptions and unintended tax burdens.
KPMG stressed balancing revenue generation with sustainable growth noting ambiguities could hinder equity simplification competitiveness and evasion combat while spurring disputes capital flight and noncompliance.
In Section 3(b) and (c) of the NTA on tax imposition the law lists taxable persons as individuals families companies trustees and estates but omits communities despite defining community as a person under Section 201 creating liability uncertainty.
The firm recommends explicit inclusion of communities for taxation or clear exemption to resolve the oversight.
Section 17(3)(b) on non-resident taxation fails to absolve non-residents without Permanent Establishment or Significant Economic Presence from registration where source deductions serve as final tax despite Section 17(4) intent.
Updating Section 6(1) of the NTAA would clarify this exempting such non-residents from returns as intended.
Section 6(2) on Controlled Foreign Companies deems undistributed foreign profits distributed yet includable in Nigerian company profits at 30 percent tax while local dividends qualify as franked investment income but foreign ones do not.
KPMG calls for uniform dividend treatment to avoid double taxation discrepancies.
Section 20(4) limits deductions for foreign currency expenses to Central Bank official rates denying relief for market premiums amid forex scarcity discouraging legitimate transactions.
The firm suggests removing this restriction focusing instead on liquidity enhancements and transaction monitoring.
Section 21 disallows deductions for expenses without VAT charged penalizing buyers for suppliers inaction even if business-valid urging allowance solely based on wholly exclusively business purpose.
Section 27 on company total profits omits clarity on capital loss deductibility excluding digital assets recommending explicit inclusion for fairness.
Section 30 limits individual chargeable income deductions to narrow items like NHF NHIS pension housing mortgage interest and capped rent relief deeming the N500000 rent cap insignificant versus prior PITA consolidated allowances.
KPMG advocates retaining progressive personal allowances to curb high-income oppression noncompliance and capital flight.
Further gaps span Sections 39 40 on chargeable gains 47 on indirect transfers 63(4) and 162(b) on collective schemes and withholding tax on non-resident insurance premiums warranting exclusions.
Allegations of gazetted Acts discrepancies from National Assembly bills prompted certified versions release yet shortfalls persist requiring amendments.
Businesses face impacts on footprints documentation related-party dealings payroll e-invoicing and ERP configurations demanding expert training and tax-managed services.
KPMG urges international cooperation for information sharing capacity building and stakeholder engagement to bolster administration while advising comprehensive impact analyses for compliance mitigation.
