KPMG flags errors, gaps in gazetted tax legal guidelines

Nigeria’s newly gazetted tax legal guidelines, which turned efficient on 1 January 2026, comprise errors, inconsistencies, gaps, and omissions that might have an effect on companies and taxpayers, in accordance with a report by KPMG Nigeria.

The report reviewed the Nigeria Tax Act and the Nigeria Tax Administration Act, alongside the Nigeria Income Service Institution Act and the Joint Income Board Institution Act, noting that sure provisions within the new legal guidelines might create compliance and operational challenges.

“There are specific errors, inconsistencies, gaps, omissions, and lacunae within the new tax legal guidelines that should be urgently reconsidered to make sure the attainment of the acknowledged goals,” the report acknowledged.

KPMG highlighted that Part 3(b)&(c) of the NTA, which specifies taxable individuals, omits “neighborhood”, creating uncertainty over whether or not communities are liable to pay tax.

“If the intention is to impose a tax on communities, this ought to be explicitly launched in Part 3. In any other case, the regulation ought to clearly state that communities are actually exempt from tax,” the report mentioned. Part 6(2) of the NTA was flagged for probably taxing overseas dividends in a different way from home dividends.

“It thus seems that such dividends can be taxed on the revenue tax charge. Consequently, there can be variations within the remedy of dividends distributed by Nigerian corporations and people distributed by overseas corporations,” KPMG famous.

KPMG additionally raised issues that non-residents might face unclear obligations concerning tax registration and withholding taxes underneath Part 17(3)(b) and (c).

“Non-residents that do not need a everlasting institution or Important Financial Presence shouldn’t be required to file tax returns. The regulation doesn’t clearly exempt such corporations, creating potential compliance challenges,” the report mentioned.

Moreover, Sections 20 and 21 of the NTA restrict deductions on overseas foreign money bills to the official Central Financial institution charge and disallow bills on which VAT has not been charged.

“With the present state of the financial system, focus ought to be on enhancing liquidity and introducing stricter reporting necessities to trace and monitor overseas change transactions,” KPMG suggested.

KPMG mentioned the highlighted gaps might have an effect on tax compliance, planning, and monetary reporting for each home and multinational corporations working in Nigeria. The agency advisable pressing clarification and amendments to make sure the legal guidelines obtain their acknowledged goals of equity, effectivity, competitiveness, and income technology.

“Hopefully, the Nationwide Meeting’s launch of the ‘licensed’ Acts will put this matter to relaxation, however solely time will inform,” the report concluded.