A heated debate has emerged between the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, and the global advisory firm KPMG regarding the Nigeria Tax Act, which took effect on January 1, 2026.
The latest debate centers on KPMG’s critique highlighting alleged errors, inconsistencies, gaps, and omissions in the Nigeria Tax Act (NTA) and related legislation, while the government insists these are deliberate policy choices rather than flaws.
The new tax laws, signed by President Bola Tinubu in June 2025, represent the most comprehensive tax overhaul in decades.
The government said the new tax laws aim to consolidate fragmented tax rules, boost revenue mobilization, simplify administration, eliminate nuisance taxes, and improve Nigeria’s low tax-to-GDP ratio.
However, in a detailed newsletter titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” KPMG acknowledged the laws’ potential to transform tax administration but warned that unresolved issues could undermine their objectives.
Key concerns include:
- Lack of inflation adjustment for capital gains calculations (Sections 39 and 40), potentially taxing inflationary rather than real gains in Nigeria’s high-inflation environment.
- Ambiguities in non-resident taxation, such as unclear exemptions from registration and filing for those subject to final withholding tax.
- Inconsistencies in dividend treatment between domestic and foreign companies.
- Restrictions on deducting foreign exchange expenses at rates above the official Central Bank of Nigeria rate, which could increase tax burdens amid forex shortages.
The newsletter reads in part: “One of the most far-reaching concerns relates to the computation of chargeable gains under Sections 39 and 40 of the Nigeria Tax Act, which require capital gains to be calculated as the difference between sale proceeds and the tax-written-down value of assets, without any adjustment for inflation, analysis by KPMG revealed.
“This approach has attracted attention largely because of Nigeria’s inflation environment. Headline inflation has remained in double digits for eight consecutive years, averaging above 18 percent between 2022 and 2025, according to data from the National Bureau of Statistics. Over the same period, asset price movements have been heavily influenced by currency depreciation and general price increases.
“Actual market behaviour shows a mixed reaction to tax policy expectations, despite a strong full‑year rally, with the NGX All‑Share Index up more than 50 percent and market capitalisation near N99.4 trillion, the equities market saw significant sell‑offs in late 2025, including a N6.5 trillion drop in market value in November amid uncertainty over the new capital gains tax rules, underscoring investor sensitivity to tax policy shifts.
“In its review of the law, KPMG Nigeria noted that taxing nominal gains in a high-inflation environment could result in taxpayers being assessed on inflationary gains rather than real economic value. The firm recommended the introduction of a cost indexation allowance to adjust asset values for inflation when computing chargeable gains.
“According to the analysis, such an adjustment would reduce distortions in effective tax rates while still allowing the government to generate additional revenue from genuine capital appreciation.
“Another provision drawing scrutiny is Section 47 of the Nigeria Tax Act, which subjects gains from indirect transfers of shares or assets by non-residents to Nigerian tax where such transfers result in changes in ownership of Nigerian companies or assets located in Nigeria.
“The provision is being introduced amid weak foreign investment inflows. Data from the United Nations Conference on Trade and Development shows that foreign direct investment into Nigeria remains below pre-2019 levels, reflecting broader investor caution.
“While similar indirect transfer rules exist in other jurisdictions, analysts note that such regimes are typically supported by detailed guidance and clear thresholds to reduce uncertainty.
“KPMG’s analysis recommended that Nigerian tax authorities issue clear administrative guidance defining the scope, thresholds, and reporting obligations associated with indirect transfers. The firm noted that clarity would reduce the risk of disputes, improve compliance, and mitigate potential negative effects on foreign investment flows.”
However, in a swift response, Oyedele has defended the Nigeria Tax Act, clarified the policy intent, stating that KPMG Nigeria does not understand the reform.
Oyedele said: “We welcome all perspectives that contribute to a shared understanding and successful implementation of the new tax laws.
“We acknowledge that a few points raised by KPMG are useful, particularly where they relate to implementation risks and clerical or cross-referencing issues.
“However, the majority of the publication reflected a misunderstanding of the policy intent, a mischaracterisation of deliberate policy choices, and, in several instances, repetitions and presentation of opinion and preferences as facts.
“A significant proportion of the issues described as “errors,” “gaps,” or “omissions” by KPMG are either:
“The firm’s own errors and invalid conclusions,
“Issues not properly understood by the firm,
“Missed context on broader reforms objectives,
“Areas where KPMG prefers different outcomes than the choices deliberately made in the new tax laws, and
“Obvious clerical and editorial matters have already been identified internally.
“While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps.
“KPMG would have been more effective if the firm had adopted a similar approach to other professional firms that engaged directly, providing the opportunity for clarifications and mutual learning.
It is equally important to distinguish between policy choices designed to achieve the reform objectives and proposals that merely represent a firm’s preference.”
𝐖𝐡𝐚𝐭 𝐊𝐏𝐌𝐆 l𝐞𝐟𝐭 o𝐮𝐭
After making a point-by-point rebuttal of KPMG’s arguments, Oyedele noted that “While acknowledging the objectives of the reform, KPMG could have highlighted the major structural improvements under the new laws, including:
“Simplification and tax harmonisation,
“The scope for reduction in corporate tax rate from 30% to 25%,
“Expanded input VAT credits for businesses,
“Tax exemption for low-income earners and small businesses,
“Elimination of minimum tax on turnover and capital, and
“Improved investment incentives for priority sectors. A balanced assessment would have recognised these transformative elements, among others.”
𝐂𝐨𝐧𝐜𝐥𝐮𝐬𝐢𝐨𝐧 𝐚𝐧𝐝 w𝐚𝐲 f𝐨𝐫𝐰𝐚𝐫𝐝
He added that “The tax reform is the result of an extensive consultation with various stakeholder groups in addition to the legislative process that included widely publicised public hearings, avenues intended for all stakeholders, including international firms, to provide technical expertise at the formative stage.
“In any comprehensive overhaul of a nation’s tax framework, clerical inconsistencies or cross-referencing gaps may occur, and these are already being identified within the government.
“The tax reform represents a bold step toward a self-sustaining and competitive Nigeria. An effective review needs to connect identified gaps to clear policy intents and the reality of modern-day tax systems within the context of economic development and global competitiveness.
“At this stage, the effectiveness of the tax law depends on administrative guidance, clarifications from the tax authority, and regulations to complement precise statutory provisions where necessary pending future amendments.
“We urge all stakeholders to pivot from a static critique to a dynamic engagement model, which allows for clarifications and a productive partnership in the implementation of the new tax laws.”
