KPMG Nigeria has identified significant “errors, inconsistencies, gaps, omissions, and lacunae” in the recently enacted New Tax Act (NTA) 2025 and the Nigeria Tax Administration Act (NTAA) 2025. In a newsletter released on Friday, January 9, 2026, the global professional services firm warned that these legislative flaws could undermine the government’s primary objectives of streamlining tax administration and boosting the tax-to-GDP ratio. The firm specifically highlighted Section 3(b) and (c) of the NTA, which omits the term “community” from the list of entities on whom taxes may be imposed, despite including it in the general definition of a “person,” creating a legal vacuum for communal tax obligations.
A major concern raised by KPMG involves Section 6(2) of the NTA, which addresses Controlled Foreign Companies (CFC). The firm noted that the current wording could inadvertently lead to double taxation for Nigerian companies with offshore operations. By stating that undistributed foreign profits are “construed as distributed” while simultaneously requiring them to be “included in the profits of the Nigerian company,” the law effectively subjects these profits to a 30% income tax rate without clear relief. KPMG advised the government to provide immediate clarity on the treatment of foreign versus local dividends to maintain Nigeria’s competitiveness for cross-border investments.
The firm also picked holes in the deduction rules under Section 20(4) of the NTA, which limits foreign exchange expense deductions to the official Central Bank of Nigeria (CBN) rates. KPMG argued that this fails to account for market realities where businesses often source forex at higher parallel market rates due to liquidity shortages. Furthermore, Section 21(p) was flagged for disallowing tax deductions on expenses where Value Added Tax (VAT) was not charged, effectively penalizing compliant businesses for the failures of their suppliers. KPMG recommended expunging this provision, insisting that expenses should be deductible as long as they are “wholly and exclusively” incurred for business purposes.
In its final recommendations, KPMG urged the Federal Government to reconsider the personal income tax adjustments in Section 30, describing the ₦500,000 rent relief as “insignificant” given current inflation. The firm suggested that failure to address these “oppressive” provisions could lead to capital flight and widespread non-compliance. While praising the overall intent of the reforms as “transformational,” KPMG emphasized that the National Assembly must move swiftly to release corrected “certified” versions of the Acts to restore investor confidence and provide a stable legal framework for the 2026 fiscal year.
