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KPMG flags red signals in new tax laws
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KPMG, globally renowned auditing firm with expertise on tax services, says it has identified loopholes in the new tax laws.
The Presidential Fiscal Policy and Tax Reforms Committee had said it proposed the laws to provide better oversight on government revenues, and streamline tax administration in Nigeria to bring it closer to best practices globally and improve efficiencies in tax administration.
However, since President Bola Tinubu assented to the laws on June 26, 2025, there have been different forms of controversies surrounding them.
The laws – the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA) – became effective on January 1, 2026.
Other are – the Nigeria Revenue Service Establishment Act (NRSEA) and the Joint Revenue Board Establishment Act (JRBEA) – which had become effective since June 26, 2025, were activated on January 1, 2026.
In a newsletter titled, “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions”, KPMG called for urgent reviews to ensure the attainment of the tax reform objectives.
The piece said that if well implemented, there are many provisions in the laws that would result in increased revenue for the government.
But it laid emphasis on the need to strike a balance between revenue generation and sustainable growth.
“Section 3(b)&(c) of the NTA – Imposition of tax – Error/Gap – The section specifies persons on
whom taxes should be levied, including individuals, families, companies or enterprises, trustees, and an estate, but omits ‘community.’ However, community’ is included in the definition of ‘person’.”
Under Section 201.
“Recommendation – If the intention is to impose tax on communities, this should be explicitly
introduced in Section 3. Otherwise, the law should clearly state that communities are now exempt from tax.
“Section 6(2) of the NTA – Controlled foreign companies (CFC) Error/Gap – The Act states that undistributed foreign profits are to be “construed as distributed” but also mandates that they be “included in the profits of the Nigerian company” (implying income tax at 30%). Though dividend distributed by a Nigerian company is deemed to be franked investment income, this does not appear to be the case with dividends distributed by foreign companies. It thus appears that such dividends will be taxed at the income tax rate. Consequently, there will be differences in the treatment of dividends distributed by Nigerian companies and those distributed by foreign companies.
KPMG in its latest newsletter titled, “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions”, reaffirmed the potential of the laws to transform tax administration in the country.
“Recommendation – Modify the section by providing clarity on the treatment of foreign and local dividends.”
Citing an error/gap in Section 17(3) (b) of the NTA which bothered on taxation of non-resident persons, KPMG recommended that Section 6(1) of the NTAA should be updated to include not only non-residents that derive passive income from investments in Nigeria but also income in which the deduction at source is the final tax.
This, it stated, would clearly absolve non-residents from the tax registration requirement where they have no Permanent Establishment (PE) or Significant Economic Presence (SEP) in the country.
The report stated, “This section specifies the conditions under which profits derived by a non-resident are taxable in Nigeria. Although Section 17(4) of the NTA states that payment deducted at source in respect of payments by Nigerian residents to non-residents, irrespective of where the service is rendered, shall be final tax where the non-resident has no permanent establishment (PE) or Significant Economic Presence (SEP) in Nigeria to which the payment is attributable, it does not clearly absolve the non-resident from tax registration requirements under Section 6(1) of the NTAA.
“This in, our view, cannot be the intention of the law. The intention should be that non-residents that do not have PE or SEP in the country should not be required to file tax returns as provided for in Section 11(3) of the NTAA.”
The section states that expenses incurred in a currency other than the naira may only be deducted to the extent of its naira equivalent at the official exchange rate published by the Central Bank of Nigeria (CBN).
According to KPMG, this implied that where a business buys forex at a rate that is higher than the official rate, such a company cannot claim tax deduction for the difference in value between the official and the other rates.
The intention, it noted, is to discourage speculative foreign exchange transactions and encourage the appreciation of the naira, adding however, that issues surrounding the accessibility of all forex needs due to supply problems have not been fully considered.
“We do not think that this condition is necessary at this time. With the current state of the economy, focus should be on improving liquidity and introducing stricter reporting requirements to track and monitor foreign exchange transactions.”
KPMG also picked holes in Section 21 of the NTA which includes expenses on which VAT had not been charged.
“This means that such expenses will not be considered allowable tax deductions even when those expenses have been validly incurred for business purposes. This implies that a company could be held accountable for any inaction or non-performance by its suppliers or service providers.”
“While the defaulting service providers may eventually be required to pay the VAT during an audit or investigation, the company will have already been denied the ability to claim a deduction for the related expense,” it said.
(Daily Trust)
News
Atiku hails US report on Tinubu’s fiscal policy, says ‘I’m vindicated “
Atiku Abubakar, presidential candidate of the African Democratic Congress (ADC) and former Vice President of Nigeria, on Friday commended recent report by the United States Department of State highlighting concerns over fiscal transparency in Nigeria, with specific reference to the federal government’s failure to disclose revenues and expenditures.
Stating that it vindicated his position for consistently calling out President Bola for its failure to uphold the basic standards of fiscal transparency, accountability, and disclosure required in a modern democracy.
The US report, had stated that: “The government made its enacted budget and end-of-year report widely and easily accessible to the public, including online, but did not publish its executive budget proposal within a reasonable period.
“…Budget documents did not provide a substantially complete picture of the government’s revenues and expenditures, or break down expenditures to support executive offices in the budget.”
Atiku, who said the report aligned with his concerns quoted the part, where it said: “Actual revenues and expenditures did not reasonably correspond to those in the enacted budget.”
The report also carpeted the Office of the Auditor-General, for did not meeting international standards of independence and did not publish substantive reports, adding that the Tinubu-led government did not meet the minimum requirements for fiscal transparency during the period under review.
Citing the failure to provide timely, detailed, and publicly accessible information on government revenues and expenditures, as well as the absence of credible audit trails, the former VP, said the observation was on all fours with his position over the years that Nigerians were being kept in the dark about how public resources are generated and spent.
Maintain that without full disclosure of how public funds were earned and spent, Nigeria could not attract investment, fight corruption, or build public trust, Atiku, added: “Transparency is not a slogan. It is the foundation of good governance.
This report confirms what we have been saying that Nigerians deserve to know where every kobo is coming from and where it is being spent. They are our resources and not the resources of President Bola Tinubu and his family and friends.”
While stressing the importance of fiscal transparency as a key benchmark for investors, donor agencies, and credit rating firms, he argued that since the Nigerian economy also relied heavily on foreign investment and multilateral support to fund infrastructure and social programmes, publishing detailed, timely data on revenue from oil, taxes, and borrowing, and on how that money was spent, remained critical to restoring confidence amid rising debt and inflation.
News
Osun Guber: Heavy Security Presence at INEC Office Ahead of Saturday’s Poll
There is a heavy security presence at the Independent National Electoral Commission (INEC) office along the Gbongan-Ibadan Road in Osogbo, Osun State, as final preparations intensify for Saturday’s governorship election.
Our correspondent observed a large number of security personnel, including officers of the Nigeria Police Force, stationed within and around the INEC premises on Friday.
The deployment is part of the security arrangements being put in place ahead of the movement of election personnel and materials to the state’s 30 local government areas.
Election stakeholders, including civil society organisations, journalists and accredited observers, were also seen at the INEC office as preparations for the poll reached a critical stage.
The Resident Electoral Commissioner in the state, Oluwatoyin Babalola, was also said to be holding meetings with National Commissioners and supporting Resident Electoral Commissioners from other states as final arrangements for the election were being concluded.
The governorship election is scheduled to hold across 3,763 polling units in 332 wards spread across the 30 local government areas of the state.
Meanwhile, INEC had on Thursday disclosed that 1,906,390 Permanent Voter Cards (PVCs), representing 81.50 per cent of the 2,339,233 registered voters in the state, had been collected ahead of the election.
INEC’s National Commissioner and Chairman of the Information and Voter Education Committee, Mohammed Haruna, disclosed this in a statement.
According to him, 426,842 PVCs, representing 18.50 per cent of the total registered voters, remained uncollected and had been safely deposited with the Central Bank of Nigeria (CBN), in line with the commission’s established practice.
The commission also disclosed that some registered voters whose PVCs were damaged, defaced or lost had applied for replacement.
It said 6,101 applicants had printed downloadable copies of their replacement PVCs.
The heightened security presence at the INEC office comes amid increased preparations by security agencies and other stakeholders to ensure a peaceful and credible governorship election in the state.
News
Osun Election: Police Deploy 30 CPs, 15,000 Personnel as DIG Takes Charge of Security
The Nigeria Police Force has deployed no fewer than 30 Commissioners of Police and more than 15,000 personnel to provide security for Saturday’s governorship election in Osun State.
The Force also disclosed that a Deputy Inspector-General of Police (DIG) would coordinate the overall security operations for the election, while helicopters and drones would be deployed for aerial and area surveillance before, during and immediately after the poll.
The Force Public Relations Officer, CSP Anietie Iniedu, disclosed this while briefing journalists on Friday in Osogbo, the Osun State capital, on the police preparations for the election.
Iniedu said the police commenced the deployment of personnel and other security resources three weeks before the election, adding that the measures were designed to ensure adequate security across the state’s 30 local government areas.
According to him, more than 15,000 police operatives would be deployed for election duties, while a police helicopter and drone unit had already arrived in Osogbo to support surveillance operations.
He further disclosed that two units of the Police Mobile Force (PMF), each comprising more than 60 personnel, had been deployed to the headquarters of the Independent National Electoral Commission (INEC) in Osogbo.
Similarly, he said each of the 30 local government areas would have a PMF unit to reinforce security during the election.
“We have deployed armed mobile policemen to every local government area in the state. So, we have 30 units across 30 local government areas. A unit is about 60 policemen.
“We also have two units of armed mobile policemen attached to the Independent National Electoral Commission headquarters in Osogbo here. The men who stay at the local government areas are being coordinated by a Commissioner of Police. There is a Commissioner of Police in each Local Government Area.
“We also have a Deputy Commissioner of Police in each Local Government Area, as well as a Mobile Police Commander and a PMF commander with the rank of Assistant Commissioner of Police in each Local Government Area.
“As of Thursday, our helicopters and drone units have arrived in Osogbo, and they will be conducting area surveillance from now, during and immediately after the elections.”
The Force PRO also disclosed that the Army would cordon off border routes leading into Osun State from midnight on Saturday as part of measures to restrict movement during the election.
“We will be locking down the state. We will not be allowing any vehicular movement apart from those on essential duty, security duties and those going to cast their franchise,” he said.
Iniedu urged parents to caution their children and wards against engaging in electoral offences, warning that security agencies would deal with anyone found violating the law.
He specifically identified intimidation, stalking, vote-buying and ballot-box snatching as offences that would attract legal consequences.
He also disclosed that a mobile court would be available to handle cases involving persons arrested for alleged electoral offences.
On firearms recovered from suspected hoodlums in the state, Iniedu said the police were yet to collate the specific details of the weapons but disclosed that about 34 illegal firearms had so far been recovered.
“We don’t have specific details about the guns we have mopped up, but I know that in Osun State, so far, we have mopped up about 34 illegal firearms, and investigations are ongoing,” he said.
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