Professional services firm, KPMG, has raised concerns that ambiguities and inconsistencies in Nigeria’s newly enacted tax laws could discourage investment, fuel disputes with tax authorities and trigger capital flight if not urgently addressed.
In a report titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” KPMG reviewed key provisions of the Nigeria Tax Act (NTA), which took effect on January 1, 2026, warning that unclear drafting could undermine the government’s revenue and investment objectives.
According to the firm, while the new law aims to modernise Nigeria’s tax framework and improve revenue mobilisation, several provisions lack clarity and could lead to conflicting interpretations between taxpayers and regulators.
One major concern highlighted is Section 27 of the Act, which governs the determination of total profits for companies. KPMG noted that the provision is unclear on whether capital losses—excluding those from the disposal of digital or virtual assets—are deductible.
Although the firm believes the intention of the law is to allow such deductions, it warned that the absence of explicit wording could result in disputes and prolonged litigation.
“The NTA is not definite on whether capital loss, other than that arising from the disposal of digital or virtual assets, is deductible. However, we believe that the intention is for such losses to be deductible,” KPMG said, urging the Federal Government to amend the section to eliminate uncertainty.
The report also examined Section 30, which outlines allowable deductions for individuals. KPMG observed that deductible items are limited mainly to pension contributions, National Housing Fund and National Health Insurance Scheme payments, life insurance premiums, mortgage interest on owner-occupied homes and a rent relief capped at ₦500,000.
The firm described these reliefs as narrow, especially when considered alongside expanded tax bands and rates, warning that the provisions could be perceived as oppressive by high-income earners.
KPMG cautioned that perceptions of unfairness and lack of clarity in tax laws could lead to non-compliance and capital flight, particularly as wealthy individuals and corporate investors seek lower-tax jurisdictions.
Further concerns were raised over Sections 39 and 40 of the Act, which deal with capital gains computation. Under the current framework, gains are calculated without adjusting for inflation, a move KPMG said could significantly overstate taxable gains in Nigeria’s high-inflation environment.
As a remedy, the firm recommended introducing a cost indexation allowance based on the Consumer Price Index to better align tax liabilities with economic realities.
KPMG urged the Federal Government to urgently review and amend the identified provisions, stressing that clearer and more consistent tax rules would reduce disputes, strengthen investor confidence and support Nigeria’s broader economic growth objectives.
