KPMG Flags Multiple Errors, Gaps In New Tax Laws, Seeks ‘Urgent’ Review

KPMG, a global network of professional services firms, has said that the new tax laws contain “errors, inconsistencies, gaps, omissions, and lacunae” that require urgent review and reconsideration to ensure the laws effectively achieve their stated objectives.

In its newsletter, the professional services firm outlined several areas where revisions are required following a review of the New Tax Act (NTA), 2025.

KPMG said Section 3(b) and (c) of the NTA specifies persons on whom taxes may be imposed but omits the term ‘community’, despite its inclusion in the definition of a ‘person’.

The firm recommended that communities should be explicitly included or exempted for tax purposes to avoid ambiguity.

The professional services firm also said Section 6(2) of the NTA, which addresses controlled foreign companies, may result in double taxation, advising that amendments should clarify the treatment of foreign and local dividends.

According to KPMG, the Act states that undistributed foreign profits are to be “construed as distributed” while also requiring such profits to be “included in the profits of the Nigerian company”, implying income tax at 30 percent.

Tax Registration Exemption Needed For Non-Resident Companies

KPMG said Section 6(1) of the Nigeria Tax Administration Act (NTAA), 2025, should be amended to exempt non-resident companies whose income is subject to final tax deduction at source from tax registration.

This, the firm said, would align with Section 11(3) of the NTAA, which already exempts such companies from filing tax returns.

On withholding tax (WHT), KPMG said Section 17(3)(c) of the NTA should be amended to exempt insurance premiums paid to non-residents, arguing that the current requirement for Nigerian residents to deduct WHT discourages economic growth and competitiveness.

The firm also advised removing the condition in Section 20(4) of the NTA that limits foreign exchange expense deductions to Central Bank of Nigeria (CBN) rates.

Instead, it suggested focusing on improving liquidity and strengthening reporting requirements.

In addition, the organisation recommended expunging Section 21(p) of the NTA, proposing that expenses should be tax-deductible if incurred wholly and exclusively for business purposes, regardless of unpaid value-added tax (VAT).

For capital losses, the firm suggested modifying Section 27 of the NTA to clearly specify how such losses should be deducted, noting that the current provision lacks clarity.

KPMG also addressed personal income taxation, recommending that Section 30 of the NTA should retain the former consolidated personal allowance under the Personal Income Tax Act (PITA), adjusted for inflation.

The company said the current N500,000 rent relief is insignificant and does not adequately balance the tax burden on individuals or promote voluntary compliance.

The firm identified additional gaps in Sections 39, 40, 47, 63(4), 72, 162, 196, and 201 of the NTA, as well as parts of the First and Second Schedules, calling for the review of the provisions to improve clarity and effectiveness.

According to KPMG, the proposed revisions would address issues relating to the computation of chargeable gains, indirect transfers, tax exemptions, and incentives for specific industries.

The firm further recommended reviewing and amending Paragraphs 5 and 9 of the Second Schedule, the Ninth Schedule on stamp duties, the Twelfth Schedule on partnerships and pensions, Sections 13, 22(2), and 22(9) of the NTAA, and Section 5 of the Joint Revenue Board Establishment Act (JRBEA).

KPMG sought the introduction of a simplified certification process through Tax-Pro Max to enable small companies to verify their status to counterparties.

The firm said this would address challenges faced by larger companies in confirming the “small company” status of their business partners.

KPMG also asked the government to review all inconsistencies in the new tax laws to strike a balance between revenue generation and sustainable economic growth, while advising businesses to assess the impact of the laws on their operations and ensure adequate compliance and documentation readiness.