Just days after Nigeria’s ambitious new tax framework came into force on 1 January 2026, global advisory firm KPMG has raised serious concerns that the very laws designed to simplify and modernise the country’s tax system may instead be sowing confusion and risk, potentially undermining investor confidence and economic growth.
In an in-depth analysis titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” KPMG says it supports the overarching goals of the reform, including equity, efficiency and competitiveness, but warns that unclear language, structural inconsistencies and overlooked provisions could produce unintended consequences.
Ambiguities Leave Too Much to Interpretation
At the heart of KPMG’s critique are sections of the Nigeria Tax Act (NTA) and related legislation that, according to the firm, lack the precision needed to guide taxpayers and regulators alike.
For example, the law’s treatment of capital losses,a key factor in corporate profitability, is not definitive on whether losses outside digital or virtual assets may be deducted for tax purposes.
KPMG believes the intent was to allow such deductions, but warns that the absence of explicit wording could spark disputes between taxpayers and the Nigeria Revenue Service.
The firm also points to personal income tax provisions that limit deductible expenses to a narrow list, including pensions and a capped rent relief of ₦500,000.
KPMG argues this could be perceived as oppressive, especially by higher-income earners, potentially eroding voluntary compliance and prompting wealth migration to lower-tax jurisdictions.
Foreign Investment and Compliance Concerns
Beyond individual taxpayers, KPMG’s report flags multiple operational challenges for businesses — particularly non-residents and multinational companies.
Among other recommendations, the firm suggests clarifications to how non-resident income and withholding tax obligations are treated, to ensure that companies without a permanent establishment aren’t unfairly required to register for tax returns.
It also calls for clearer guidelines on how foreign dividends are taxed relative to domestic ones, an issue that could have significant implications for cross-border investment flows.
Rising Risks: Disputes, Litigation and Capital Flight
The consequences of unclear legislation aren’t just theoretical. Multiple tax analysts say that ambiguity in a law of this magnitude could trigger prolonged disputes between businesses and the tax authority, increase compliance costs, and even deter foreign investors.
Speaking to the potential economic fallout, KPMG warns that where highly paid professionals and investors perceive the tax regime as unduly harsh or unpredictable, capital flight, the relocation of wealth to more favourable tax environments, could accelerate.
Government’s Reform Vision Still Supported – With Caveats
Despite the critique, KPMG acknowledges the transformative potential of the reform package, which consolidates dozens of disparate tax provisions into a more unified system aimed at boosting compliance and government revenue.
But its message is clear: implementation without clarification could do more harm than good.
The firm urges the government to engage in urgent statutory reviews, stakeholder consultations, and international collaboration to strengthen the laws and close identified gaps.
It also recommends that businesses conduct comprehensive impact assessments and align their internal systems and tax functions with the new requirements.
As Nigeria strives to balance revenue mobilisation with competitiveness in a fragile global economy, the coming weeks could prove critical, not only for the success of the tax reform itself, but for broader investor confidence in the country’s economic trajectory.
