KPMG has raised serious concerns about Nigeria’s newly enacted tax laws, warning that errors, gaps and unclear language could derail their purpose if not urgently corrected.
In its latest newsletter reviewing the New Tax Act 2025, the advisory firm highlighted several weak points. One example is Sections 3(b) and 3(c), which outline who is liable to tax. The sections do not mention “community” even though the Act defines a person to include a community. KPMG says the government must either clearly include or exempt communities to avoid confusion.
The firm also pointed to Section 6(2) on controlled foreign companies. According to KPMG, the current wording could lead to double taxation because it treats undistributed foreign profits as distributed while also adding them to the profits of a Nigerian company. This could attract income tax at 30 percent, which was not the intention.
Another recommendation is to adjust Section 6(1) of the Nigeria Tax Administration Act 2025. KPMG wants non resident companies that already pay final withholding tax on their income to be exempt from tax registration. These companies are already exempt from filing returns under Section 11(3), so the current requirement is redundant.
On withholding tax generally, KPMG advised that insurance premiums paid to non residents should be exempt. It argued that the current rule makes the Nigerian market less attractive and hurts competitiveness.
The firm also wants the removal of rules that restrict foreign exchange expense deductions to Central Bank of Nigeria rates only, describing the rule as impractical and out of touch with market reality.
Beyond these issues, KPMG listed several other gaps in both the New Tax Act and the Nigeria Tax Administration Act, touching on chargeable gains, indirect transfers, tax exemptions and incentives for specific sectors. It even suggested a simplified certification process through Tax Pro Max to confirm small company status without unnecessary hurdles.
KPMG urged the federal government to review the laws quickly, stressing that Nigeria needs tax reforms that raise revenue without killing investment or economic growth. It also advised businesses to study the new rules, measure their risk exposure and improve compliance.
