KPMG Flags ‘Gaps’ in Nigeria’s New Tax Regime

Nigeria’s long-awaited tax overhaul has come under early scrutiny as global advisory firm KPMG identifies more than two dozen “errors, gaps, omissions and inconsistencies” in the freshly enacted tax regime, warning that unresolved ambiguities could derail competitiveness, discourage foreign investment and complicate compliance for businesses.

The sweeping reforms officially took effect on January 1, 2026.

Despite a political push for harmonisation and fairness, KPMG’s newsletter notes that several contentious issues persist, including contradictory provisions, missing definitions, and unclear tax treatments.

Among the most pressing concerns is the treatment of foreign dividends, indirect share transfers and gains from asset disposals — areas that KPMG warns could trigger punitive tax exposure and accelerate capital flight if not promptly resolved. The firm highlights that the new rules could result in gains being taxed at 30% without inflation adjustment, risking a wave of asset sell-offs and distorting capital markets.

The newsletter also flags an apparent policy U-turn on export-related exemptions. Under the certified Act, profits from non-petroleum exports appear to have lost their tax-exempt status, raising uncertainty for one of Nigeria’s critical forex-earning sectors. “Clarity on Government’s new position is urgently required,” KPMG warns.

Compliance worries also feature heavily. KPMG cites conflicting rules on non-resident taxation, VAT processing timelines, definition inconsistencies and misaligned cross-references that could leave taxpayers exposed to penalties despite following due process. Even individual filing requirements lack a statutory deadline — a gap that could result in automatic penalties under the NTAA, the firm notes.

Beyond technical drafting concerns, KPMG questions the broader economic signalling of certain provisions — such as taxes on indirect asset transfers and withholding tax on foreign insurance premiums — warning these could deter investment at a time when Nigeria is seeking competitiveness.

However, the report acknowledges that the reforms have the potential to boost revenue and modernise tax administration if urgently revised and supported by international cooperation, stronger capacity and clearer operational guidance. Businesses are advised to conduct immediate impact assessments, upgrade ERP systems, retrain tax teams and prepare for more aggressive audit environments in 2026 and beyond.

With Nigeria battling fiscal pressures and low tax-to-GDP ratios, the stakes are high. Whether these reforms unlock growth or spark backlash may now hinge on how quickly policymakers revise the structural defects that KPMG has placed on the table.