KPMG Flags 31 Gaps in Tinubu’s New Tax Law, Warns of Revenue and Growth Risks
A global network of professional firms delivering accounting, audit, tax and advisory services, and widely recognised as one of the “Big Four,” Klynveld Peat Marwick Goerdeler (KPMG) has raised serious concerns over Nigeria’s newly introduced tax law, pointing to multiple gaps, inconsistencies and omissions within the legislation.
PulseNets learnt that the firm, in a detailed newsletter obtained by this medium, warned that the law in its current form contains structural weaknesses capable of undermining its stated objectives if left unaddressed.
According to KPMG, “several errors, inconsistencies, omissions, gaps and legal grey areas exist within the new tax laws, and these issues require urgent reconsideration if the intended outcomes are to be achieved.”
The firm reportedly identified 31 distinct loopholes linked to these shortcomings and proposed specific amendments to strengthen the framework of the new tax regime.
One of the major issues highlighted relates to Section 3(b) and (c) of the Nigeria Tax Act (NTA) on the imposition of tax. KPMG noted that while the provision lists individuals, families, companies or enterprises, trustees and estates as taxable persons, it fails to expressly include communities.
Explaining the inconsistency, the firm stated that “although Section 3 outlines categories of taxable persons, ‘community’ is conspicuously absent, despite being recognised under Section 201 as part of the definition of a ‘person.’”
KPMG advised that the ambiguity must be resolved, stressing that “where the intention is to subject communities to taxation, this should be clearly reflected in Section 3; otherwise, the legislation should expressly state that communities are exempt.”
The firm also faulted Section 6(2) of the NTA dealing with Controlled Foreign Companies (CFCs). PulseNets learnt that KPMG expressed concern over the treatment of undistributed foreign profits, which the Act directs to be “construed as distributed” while simultaneously requiring them to be included in the profits of a Nigerian company.
According to the firm, “this dual approach suggests that such income would attract company income tax at 30 percent, even though dividends paid by Nigerian companies are treated as franked investment income.”
KPMG further warned that “dividends received from foreign companies appear not to enjoy similar treatment, creating an uneven tax position where foreign dividends may be subjected to full income tax.”
It noted that this disparity could result in inconsistent taxation outcomes between local and foreign dividend income, recommending that the law be amended to provide explicit clarity on how both categories of dividends should be treated.
Despite its criticisms, KPMG acknowledged the transformative potential of the new tax laws, stating that effective implementation could significantly enhance revenue generation for the Nigerian government.
Also Read: Budget Office Warns Nigerians Against Speculation as New Tax Laws Take Effect January 1, 2026
However, the firm cautioned that fiscal expansion must be carefully managed, noting that “there is always a need to maintain a delicate balance between aggressive revenue mobilisation and the promotion of sustainable economic growth.”
KPMG concluded by urging the government to urgently review the highlighted gaps and inconsistencies. It also called for stronger international collaboration, stressing that “robust cooperation is required to enable information sharing, strengthen institutional capacity and enhance the overall effectiveness of tax administration in Nigeria.”
