KPMG Nigeria has issued a critical advisory warning that structural flaws and ambiguities in the newly enacted Nigeria Tax Act (NTA) could deter foreign investment and trigger significant capital flight. In a report titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” the firm argues that the legislation, which took effect on January 1, 2026, lacks the clarity needed to prevent costly litigation between taxpayers and the Nigeria Revenue Service (NRS).
A primary concern raised by the firm involves Section 27 of the NTA, which governs how companies determine total profits. KPMG points out that the law does not explicitly state whether capital losses—aside from those involving digital or virtual assets—are deductible for tax purposes. While the firm believes the legislative intent was to allow such deductions, the current silence in the text creates a “conflicting interpretation” risk that could stall business restructurings and asset disposals.
The report further highlights a significant risk in Sections 39 and 40 regarding the calculation of capital gains. Currently, the law calculates taxable gains as the simple difference between sales proceeds and the tax-written-down value of an asset, ignoring Nigeria’s high inflation environment. KPMG warns that this could lead to “substantial tax exposure” on transactions where no real economic profit was made. To address this, the firm has recommended the immediate introduction of a Cost Indexation Allowance using the Consumer Price Index to align tax obligations with economic reality.
KPMG also criticized the narrow scope of personal income tax deductions under Section 30. Deductible items are limited to contributions for housing, health, and pensions, with rent relief capped at a relatively low N500,000. The firm warns that high-income earners and wealthy individuals may perceive these limits as oppressive, potentially prompting them to relocate assets to lower-tax jurisdictions.
Despite these warnings, the federal government expects the broader reform package to simplify the system by consolidating over 110 separate taxes into a unified framework. While the government is set to forfeit approximately N1.4 trillion in revenue by cutting the corporate income tax rate from 30% to 25%, KPMG insists that without clearing up the legislative “errors and omissions,” the goal of creating a competitive investment climate may remain out of reach.
 could deter foreign investment and trigger significant capital flight. In a report titled "Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions," the firm argues that the legislation, which took effect on January 1, 2026, lacks the clarity needed to prevent costly litigation between taxpayers and the Nigeria Revenue Service (NRS).){kind=link}