Tax experts at KPMG have flagged 31 errors, gaps and unclear rules in Nigeria's new tax laws that came into force on January 1, 2026. The firm is calling for urgent fixes to avoid confusion for businesses and taxpayers.
What Happened
Four new tax laws now govern how Nigerians and businesses pay taxes:
- Nigeria Tax Act (NTA)
- Nigeria Tax Administration Act (NTAA)
- Nigeria Revenue Service Establishment Act (NRS)
- Joint Revenue Board Establishment Act (JRB)
The National Assembly recently released "certified" versions of the Acts after claims that the published laws differed from what lawmakers approved.
Key Problems Found
For Everyday Workers:
- The law does not say when individuals must file their tax returns, yet there are fines for late filing (ā¦100,000 in the first month, ā¦50,000 each month after)
- The rent relief cap of ā¦500,000 is too low compared to what workers could claim under the old law
- Deductions for things like housing and health insurance have been cut back
For Businesses:
- Companies cannot claim tax relief for costs if their supplier did not charge VATāeven if the expense was real and needed for business
- Firms that buy foreign currency above the official CBN rate cannot deduct the extra cost they paid
- The law is unclear on whether capital losses can be deducted
- Gains from selling assets will now face 30% tax with no adjustment for inflationāthis may trigger a rush to sell shares
For Foreign Investors:
- Non-resident companies face confusing rules about whether they must register for tax in Nigeria
- Tax on indirect share transfers may scare off foreign investment
- Rules on insurance payments to overseas firms conflict with existing regulations
For Oil and Gas:
- Deep offshore operations have no tax rate listedāan apparent oversight
- Petroleum investment allowances may no longer apply to some upstream companies
For Free Trade Zones:
- The law is unclear on how services within free zones should be taxed
- Some paragraphs in the schedules are incomplete or reference wrong sections
KPMG's Main Recommendations
- Fix incomplete sections and wrong cross-references throughout the Acts
- Bring back inflation adjustments for capital gains to prevent panic selling
- Restore personal allowances to ease the burden on workers
- Remove the rule that denies deductions when suppliers fail to charge VAT
- Create a simple way for small businesses to prove their status to larger partners
- Set up an independent body (like the UK's Office for Budget Responsibility) to review tax policy, rather than rely on government employees
What Businesses Should Do Now
KPMG advises companies to:
- Review how the new rules affect their tax bills
- Update payroll systems for the new personal income tax rates
- Prepare for e-invoicing requirements
- Ensure all documents support transactions in case of audits
- Train finance teams on the changes
- Seek professional advice where needed
For more details, contact KPMG Nigeria at [email protected]
Read the full document here - KPMG Newsletter