Nigeria’s Tax Laws Under Fire And What It Means For Business

KPMG flags drafting faults in Nigeria’s new tax laws. Oyedele says many are deliberate policy choices. What businesses, investors and regulators must do next.

Atlantic Post

January 10, 2026

8–12 minutes

Atlantic Post, Corporate Tax, featured, Fiscal Policy, Investment Risk, KPMG Analysis, Nigeria Revenue Service, Tax Reform 2025

Oyedele’s Defence and KPMG’s Red Flag: What Nigeria’s Gazetted Tax Laws Really Mean for Business

The row between KPMG Nigeria and the Presidential Fiscal Policy and Tax Reforms Committee is a test of how Nigeria will manage a sweeping consolidation of tax law. It also examines how to keep markets, multinationals, and small businesses onside.

It is not only a clash of technical readings of statute. KPMG’s forensic note accused the newly gazetted tax acts of containing errors, inconsistencies and omissions that could fracture compliance and spark costly disputes.

The prompt, pointed rebuttal by the presidential committee, chaired by Taiwo Oyedele, insists many of those flagged items are not errors. They are deliberate policy choices. The committee asserts that implementation guidance will cure clerical gaps.

Both positions are partly true. The danger lies in the space between law on paper and law that firms and taxpayers can reliably apply.

This investigation presents the contested technical claims. It tests them against the available texts. It also frames the possible economic and institutional fallout.

It draws on the KPMG analysis and the committee’s public statement. It also includes the gazetted acts themselves. Additionally, it uses independent interpretative notes prepared by advisory firms and think tanks.

The aim is not to pick a winner in an argument between experts. Instead, it is to identify where the reforms may deliver. It is also important to identify where they risk harming investment. Additionally, the government should urgently close the legal, administrative, and communications gaps.

Background in brief

President Bola Tinubu signed four consolidated tax laws into the official gazette after the 2025 legislative process. These laws replaced a scatter of legacy statutes. They centralised tax law architecture into the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service Establishment Act, and the Joint Revenue Board Establishment Act.

The measures are touted as a modernisation and simplification. They also come with a determined fiscal aim. The aim is to broaden the base, close avoidance routes, and increase domestic revenue mobilisation. The gazetted laws are now the operative texts that taxpayers, courts and advisers will have to apply.

KPMG’s critique, plainly summarised

KPMG in Nigeria published a technical note. It catalogued what it described as “inherent errors, inconsistencies, gaps and omissions” across the new statutes.

The firm identified over five high-risk areas. Ambiguity or omission in these areas could produce perverse outcomes for taxpayers and revenue administration. These areas include the taxation of shares and capital gains. They also involve the treatment of indirect transfers and dividend taxation. Additionally, they concern the removal or alteration of established exemptions.

KPMG warned these drafting defects could create compliance confusion, raise litigation risk and disrupt transactions if not corrected. The advisory firm urged urgent legislative corrections or clear administrative guidance.

Oyedele’s response and the committee’s framing

Mr Taiwo Oyedele’s committee acknowledged some clerical cross-referencing problems. They also identified transition wrinkles. The committee said these issues would be fixed through administrative guidance and regulations.

It firmly disagreed with KPMG’s broader characterisation. It argued that many of the items labelled “errors” were deliberate policy choices.

The committee emphasised that some differences arise from contrasting policy preferences. These differences are not drafting mistakes. Global best practice, including BEPS-aligned measures, informed deliberate provisions such as rules on indirect transfers.

The statement repeatedly urged stakeholders to move from static critique to active engagement in the implementation process.

Parsing the genuine drafting weaknesses

There are two categories to separate. First, true clerical and cross-referencing problems. These drafting defects cause section numbers to point to repealed clauses. They also omit defined terms in places where their definition is essential.

The committee has conceded these exist and says they will be addressed administratively. That is plausible for small fixes. However, administrative guidance cannot create law where a substantive omission changes tax liability. It also cannot create a new obligation.

Where the issue alters a taxpayer’s substantive rights or burdens, only a legislative amendment will do.

Second, deliberate policy choices that advisors dislike. These include the decision to apply taxing rules for indirect transfers. In some cases, there are narrower exemptions. There are changes to commencement dates. There is also the decision to link tax deductibility to VAT compliance records.

Those are policy outcomes open to debate. They are not drafting errors. The contest is whether the laws, as worded, give clear legal effect to the choices the committee says it made. If wording is ambiguous, the risk of litigation and market uncertainty rises.

Stocks, shares and the spectre of a sell-off

One flashpoint has been the taxation of gains on shares and capital receipts. KPMG’s note warned the changes could create taxable events. Institutional investors or equity holders had not priced them in. This could potentially prompt market reaction.

The committee counters that the framework is structured to range from 0% to a maximum of 30%. This is set to reduce to 25%. Moreover, 99% of investors will be entitled to unconditional exemptions. Reinvestment reliefs and enhanced deductions were designed to blunt any mass sell-off in December 2025.

The truth is nuanced. The new tax architecture expands the taxable scope for certain capital gains and virtual asset disposals. Nonetheless, the statutory exemptions and reliefs should mitigate immediate forced sales if administered as promised.

The real risk is transitional uncertainty. Investors must decide whether reliefs will be accessible in practice during audits. They must also consider if the Revenue Service will take a narrow reading. That uncertainty depresses transaction values and raises the cost of capital.

Indirect transfers and BEPS alignment

The inclusion of indirect transfer rules is a deliberate, defensible move consistent with OECD BEPS concerns and international practice.

Multinationals have for years used contrived structures to shift economic ownership without formal share transfers, eroding taxable bases. Bringing indirect transfers into domestic chargeability is an anti-avoidance tool.

However, technical precision is critical here. Poorly calibrated wording can catch innocent commercial restructuring or create double taxation without clear crediting mechanisms.

KPMG’s warning is that ambiguity may produce exactly that. The committee’s defence is sound in principle. The implementation test will be in carefully drafted regulations and treaty coordination to avoid unnecessary disputes.

Dividend treatment and the resident versus non-resident divide

The new framework treats dividends distributed by Nigerian companies differently from foreign company dividends for sound reasons. Domestic distributed profits have different withholding tax profiles. They also have different controllability and information flows.

The committee noted foreign dividends cannot be franked because no Nigerian withholding tax was deducted upstream. Yet KPMG’s concern that unequal treatment without clear relief mechanisms could disadvantage certain investors is realistic.

International investors typically seek explicit reliefs or foreign tax credits to prevent economic double taxation. If the law’s wording does not supply or connect these mechanisms, taxpayers will face higher effective rates. They will spend years litigating for clarity.

Foreign exchange deductions and monetary policy alignment

Another departure flagged was the disallowance of deductions based on parallel market foreign exchange rates. The government frames this as a fiscal tool to reinforce official exchange rate policy and discourage parallel market distortions.

Economically, tying tax deductibility to official rates discourages artificial profit-shifting through FX accounting.

Practically, however, for firms operating in an environment of multiple exchange rates, the rule can produce significant timing mismatches. It can also lead to valuation mismatches. This occurs unless clear transitional reliefs and valuation rules are set out.

Linking tax deductibility to VAT compliance

The reforms link certain tax deductibility rules to VAT compliance. This is an anti-avoidance measure aimed at closing the loop where firms claim deductions without discharging indirect tax liabilities upstream.

Intended effects are salutary. Yet the linkage raises administrative complexity. It requires near real-time data sharing between tax administration and VAT registries. A robust appeals pipeline is necessary to prevent unjust denial of deductions during routine disputes.

For small firms lacking sophisticated accounting systems the compliance burden may be disproportionate.

Non-resident registration and administration

KPMG warned non-residents may be confused into thinking final withholding tax removes registration obligations.

The committee clarified that non-residents must still register because filing returns assists broader compliance. Filing obligations enable information exchange, treaty relief claims and the application of administrative penalties.

The problem is one of communication. If taxpayers believe withholding settles their duties, and the Revenue Service later demands filings and penalties, reputational damage could occur. Capital flight is also a risk. Clear administrative guidance and industry outreach will be crucial.

Small company exemptions and lived reality

The reforms preserve a special small company regime but change thresholds and definitions. KPMG noted potential regressions from earlier reliefs.

The committee pointed out some concerns. These concerns predate the new acts. They stem from previous legislation, such as the Finance Act 2021.

Regardless, when micro and small enterprises feel squeezed, the economy’s formalisation thrust may stall.

A credible implementation plan for small business registration, education and phased compliance windows must accompany any base-broadening move.

Political economy and the unglamorous arithmetic of revenue

We must recognise the political imperative animating the reforms. Nigeria needs a sustainable domestic revenue base to finance public goods without overreliance on oil or unsustainable borrowing.

The laws are pitched at closing holes that feed avoidance and at mobilising revenues to meet fiscal obligations. But tax policy is not only arithmetic.

It is psychological. Investors and businesses respond to certainty, procedural fairness and predictable administration.

If drafting defects and poor communication create the perception of arbitrariness, the revenue gains will prove ephemeral. These gains may be offset by reduced investment. Higher compliance costs could also offset these gains.

Where the government should act now

First, publish a consolidated, annotated text that reconciles the official gazette with any amendments and that flags known cross-referencing fixes.

Second, fast-track a transparent, time-bound rule-making programme with public consultation windows. Focus on high-risk areas. These include indirect transfers, dividend rules, and FX valuation.

Third, commit to clear transitional reliefs for transactions straddling the old and new regimes. Reinvestment exemptions and grandfathering need precise, accessible conditions.

Fourth, roll out an outreach and compliance assistance programme for small businesses and foreign investors. Practical guidance reduces disputes.

Fifth, set up an independent technical review panel. Include representatives from large advisory firms, industry chambers, and civil society. This panel will vet administrative guidance before publication. That will not only improve technical quality but also restore trust.

Conclusion

The exchange between KPMG and the fiscal reforms committee goes beyond a sparring match. It is not just between a big four adviser and a government body.

It is a warning shot about the perils of major legal overhaul. This overhaul is conducted without parallel investment in drafting capacity. Stakeholder engagement and stepwise implementation are also lacking.

Many of the committee’s policy objectives are defensible. Many of KPMG’s technical cautions are also well founded. The immediate task for policy makers is to narrow the gap between intent and enforceable law.

Do that and Nigeria may well achieve both fairness and revenue gains. Fail, and the new laws risk becoming a vector of uncertainty that undermines the very competitiveness they seek to create.