10.1.2026
Klynveld Peat Marwick Goerdeler (KPMG) has picked holes in President Bola Tinubu tax law, which was recently introduced.
In a newsletter, KPMG a global network of professional firms providing accounting, audit, tax and advisory services, stated that “there are certain errors, inconsistencies, gaps, omissions, and lacunae in the new tax laws that need to be urgently reconsidered to ensure the attainment of the stated objectives.”
KPMG highlighted 31 loopholes bordering on the identified shortcomings in the new tax law and suggested modifications.
Highlighting the error in
Section 3(b)&(c) of the NTA – Imposition of tax, KPMG said “The section specifies persons on whom taxes should be levied, including individuals, families, companies or enterprises, trustees, and an estate, but omits ‘community.’ However, community’ is included in the definition of ‘person’ under Section 201.”
KPMG recommended that “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.”
The organisation also faulted Section 6(2) of the NTA – Controlled foreign companies (CFC), stating that “The Act states that undistributed
foreign profits are to be “construed as distributed” but also mandates that they be “included in the profits of the Nigerian company” (implying income tax at 30%).
“Though dividend distributed by a Nigerian company is deemed to be franked investment income, this does not appear to be the case with dividends distributed by foreign companies. It thus appears that such dividends will be taxed at the income tax rate. Consequently, there will be differences in the treatment of dividends distributed by Nigerian companies and those distributed by foreign companies.”
It recommended that the section should be modified by providing clarity on the treatment of foreign and local dividends.
KPMG concluded that the new tax laws would transform tax administration in Nigeria as many of its provisions would result in increased revenue for the government, if well implemented.
However, it stated there was always the need to strike a delicate balance between revenue generation and sustainable growth.
The organisation added, “It is, therefore, critical that government review the gaps, omissions, inconsistencies and lacunae highlighted in its newsletter to ensure the attainment of the desired objectives.
“Government must also seek international cooperation and collaboration to facilitate the sharing of information, build capacity and capability of tax administration in the country.”
However, Taiwo Oyedele who is chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said KPMG observations is a misrepresentation of policy intent and deliberate reform choices.
In a statement issued Saturday via his official X handle, Oyedele acknowledged that some of KPMG’s points were useful, particularly those relating to implementation risks and clerical matters. However, he stressed that “the majority of the publication reflected a misunderstanding of the policy intent, a mischaracterisation of deliberate policy choices, and, in several instances, repetitions and presentation of opinion and preferences as facts.”
Oyedele addressed several areas where KPMG had raised concerns:
Taxation of Shares: He dismissed fears of a stock market sell-off, clarifying that the tax rate on share gains is not a flat 30%. “The framework is structured from 0% to a maximum of 30%, set to reduce to 25%, with 99% of investors entitled to unconditional exemption,” he explained.
Commencement Date: He argued that KPMG’s suggestion to align commencement strictly with accounting periods was “a narrow view” that ignored complex transition issues across multiple bases of assessment.
Indirect Transfer of Shares: Oyedele defended the provision as a global best practice aimed at closing loopholes exploited by multinationals, insisting it would not undermine competitiveness.
VAT on Insurance Premiums: He noted that insurance premiums are not taxable supplies under Nigerian law, making a specific exemption “academic.”
On KPMG’s claim that including “community” in the definition of a taxable person created ambiguity, Oyedele said:
“Definitions provided in the law apply wherever the defined term appears, unless the context requires otherwise. This approach is consistent with modern legislative drafting principles.”
He also clarified the composition of the Joint Revenue Board (JRB), stressing that its limited membership was intentional to ensure focus on revenue coordination.
Oyedele rejected KPMG’s proposals that he said would undermine reform objectives, including exempting foreign insurers from tax on Nigerian premiums and allowing deductions for foreign exchange purchased at parallel market rates.
“By removing the tax subsidy for patronage of the parallel market, the policy aims to reduce incentives for round-tripping and redirect legitimate FX demands to the official market,” he stated.
On personal income tax, he argued that Nigeria’s top marginal rate of 25% was competitive compared to countries such as Ghana (35%), South Africa (45%), and the UK (45%).
Oyedele criticised KPMG for overlooking structural improvements in the new laws, including simplification, harmonisation, reduced corporate tax rates, expanded VAT credits, exemptions for low-income earners, and elimination of minimum tax on turnover.
“The tax reform represents a bold step toward a self-sustaining and competitive Nigeria,” Oyedele said. NAN