By our Reporter
KPMG has identified several shortcomings in Nigeria’s new tax laws, warning that errors, inconsistencies, omissions, and gaps could undermine their intended objectives unless urgently reviewed.
In a newsletter following its assessment of the New Tax Act (NTA) 2025, the professional services firm noted that Sections 3(b) and (c), which list persons liable to tax, exclude the term “community” despite its inclusion in the Act’s definition of a person. KPMG advised that communities should be clearly included or exempted to avoid uncertainty.
The firm also raised concerns over Section 6(2) of the NTA on controlled foreign companies, cautioning that its wording could lead to double taxation. It explained that undistributed foreign profits are treated as distributed while also being included in the profits of a Nigerian company, potentially attracting income tax at 30 percent.
KPMG further recommended amending Section 6(1) of the Nigeria Tax Administration Act (NTAA) 2025 to exempt non-resident companies whose income is subject to final withholding tax from tax registration, noting that such companies are already exempted from filing returns under Section 11(3).
On withholding tax, the firm suggested exempting insurance premiums paid to non-residents, arguing that the current requirement discourages competitiveness. It also advised removing the restriction that ties foreign exchange expense deductions strictly to Central Bank of Nigeria rates.
Additional gaps were identified in several sections and schedules of the NTA and NTAA, affecting chargeable gains, indirect transfers, tax exemptions, and sector-specific incentives. KPMG also proposed a simplified certification process via Tax-Pro Max to help verify small company status.
The firm urged the government to address the inconsistencies to balance revenue generation with sustainable economic growth, while advising businesses to assess the impact of the new laws and strengthen compliance efforts.
