KPMG has flagged key concerns over the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), warning that several provisions could create legal uncertainty.
The firm outlined the errors and gaps in a recent report titled ‘Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions.’
Pinnacle Daily reports that the implementation of the new tax laws has been set to kick off on January 1, 2026.
A global professional services firm and one of the “Big Four” accounting firms providing audit, tax and advisory services, KPMG, in its report, noted that Section 3 of the NTA excludes “community” from the list of taxable entities, despite the term being included in the definition of a “person” elsewhere in the legislation.
It recommended that communities be expressly included in Section 3 or that the law clearly states that they are exempt from taxation.
“If the intention is to impose tax on communities, this should be explicitly introduced in Section 3. Otherwise, the law should clearly state that communities are now exempt from tax,” KPMG urged.
The firm also raised concerns over the omission of the hydrocarbon tax rate for deep offshore operations.
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It recommended that the rate be specified or that such operations be clearly exempted, as provided under the Petroleum Industry Act 2021.
“The hydrocarbon tax rate for deep offshore should be included or deep offshore operations explicitly exempted from HCT as it is under the Petroleum Industry Act (PIA) 2021,” it said.
On legislative inconsistencies, KPMG highlighted issues around non-resident taxation and individual tax reliefs. It observed that while the NTA 2025 treats tax deducted at source for non-residents as final, it does not clearly exempt them from tax registration where there is no permanent establishment.
To address this, the firm recommended amending Section 6(1) of the NTAA to align with the intended exemption. It also described individual tax deductions under Section 30 as overly restrictive, noting that the ₦500,000 rent relief is insignificant.
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KPMG advised retaining the former consolidated personal allowance under the Personal Income Tax Act (PITA) to avoid excessive taxation of individuals.
The firm further identified major flaws in financial computation and administrative provisions. It noted that the NTA 2025 calculates chargeable gains without inflation adjustments, a move it warned could trigger a stock market sell-off.
KPMG recommended introducing a cost indexation allowance linked to the Consumer Price Index. It also pointed out that Section 13 of the NTAA 2025 mandates individual tax filings but fails to specify a submission deadline, creating the risk of arbitrary penalties.
To address this, it advised setting a clear filing timeline similar to that required for employers. Additionally, the firm noted that the Joint Revenue Board lacks independence, as its membership is made up entirely of government officials, and recommended a review of its composition to promote objective fiscal oversight.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
