Nigeria’s new tax laws were meant to signal a reset. A clean break from overlapping statutes, confusing amendments, and an enforcement-heavy culture that punishes compliance more than evasion.
Instead, barely days after the laws took effect, the country found itself in an awkward public standoff with global advisory firm KPMG releasing a detailed analysis pointing out 31 errors, gaps, and contradictions in the new tax framework.
The federal government fired back, saying KPMG “misunderstood” the law.
That exchange may sound like insider drama between technocrats, but it carries real consequences for businesses, investors, and everyday Nigerians.
Because here is the uncomfortable question nobody wants to say out loud: “if KPMG does not clearly understand the tax law, how exactly is the average Nigerian, or even the average CFO, supposed to?
Reform without clarity is uncertainty with better branding.
What KPMG Said
KPMG’s document was not a rant. It was technical, cautious, and specific. It highlighted issues ranging from drafting errors and missing cross-references to deeper policy contradictions that could change who pays tax, how much they pay, and when they pay it.
Some of the red flags were structural. Others were economic.
Take foreign exchange (FX) costs. Under the new laws, deductible FX expenses appear to be tied strictly to the official Central Bank rate.
In theory, this supports monetary policy. In reality, many Nigerian businesses source FX at market rates because that is where liquidity exists.
Also highlighted was non-resident taxation. The law appears to require some non-resident service providers to register for Nigerian tax even where withholding tax has already been deducted as a final tax.
For multinational companies and local firms that rely on foreign vendors, this is an administrative nightmare waiting to happen. Payments slow down. Contracts get renegotiated. Costs rise.
Capital gains tax is another flashpoint. The new framework does not clearly provide for inflation indexation when calculating chargeable gains. In a high-inflation economy like Nigeria’s, that effectively means taxing inflation, not real value creation. The predictable response? Asset hoarding, forced disposals, or outright avoidance of long-term investment.
These are not academic issues. They affect pricing, payroll, insurance coverage, exports, digital services, and even whether companies choose to expand or quietly scale back.
Government’s Pushback
The federal government responded swiftly, arguing that many of KPMG’s concerns stem from a misunderstanding of policy intent. Some provisions, officials insist, are deliberate choices designed to close loopholes, curb arbitrage, or align tax behaviour with macroeconomic goals. Clerical errors, where they exist, will be handled administratively.
That defence is partly valid. Governments are allowed to make tough policy choices. Not every unpopular tax outcome is a mistake.
But tax law does not operate on intent alone. It operates on text, enforcement, and interpretation.
For investors watching from the outside, this kind of ambiguity is not reassuring. It signals execution risk. And in global capital markets, risk always has a price.
Why This Debate Goes Beyond KPMG
Focusing on KPMG misses the larger point. Today it is KPMG. Tomorrow it will be another advisory firm, an industry group, or a court judgment pointing out the same ambiguities.
Nigeria’s tax system does not exist in a vacuum.
CFOs must configure payroll systems, redesign ERP software, renegotiate contracts, and brief boards.
SMEs do not have in-house tax lawyers. They rely on clear rules and predictable enforcement.
When the law is vague, businesses respond in three ways: they over-comply, they freeze decisions, or they quietly exit. None of those outcomes helps revenue mobilisation in the long run.
There is also a trust issue. Tax reform requires buy-in.
Nigerians are more willing to pay taxes when they believe the taxes will be used to better their lives. But first, the rules must be fair, understandable, and consistently applied.
Public disagreements over what the law actually says do not inspire confidence.
The Missing Piece: A Clarification Compendium
This moment does not require a rollback of the tax laws. It requires something more practical and urgent.
A single, authoritative document that clearly states:
– Which contentious provisions are deliberate policy choices.
– The drafting errors.
– How each issue will be treated in practice.
– Whether fixes will come through administrative guidance or legislative amendment.
Other countries do this routinely which point to good governance.
Possible Fixes to Explore
If the government wants this reform to succeed, five areas need immediate, unambiguous clarification.
First, FX deductibility. Businesses need to know whether real FX costs will be recognised for tax purposes and from what date.
Second, non-resident taxation. Final withholding tax must mean final, not an invitation to bureaucratic limbo.
Third, capital gains. Taxing inflation is not reform. Temporary indexation rules would stabilise investment decisions.
Fourth, exports and free trade zones. Nigeria cannot preach export-led growth while leaving exporters unsure of their tax status.
Fifth, VAT on services. In a digital, cross-border economy, “place of consumption” must be explained with practical examples, not vague definitions.
In Summary
This debate is not about whether KPMG is right or the government is right. It is about whether Nigeria wants a tax system that works in practice, not just on paper.
Clarity is the foundation of compliance, investment, and trust. If global advisers are confused, ordinary Nigerians do not stand a chance.
And when taxpayers do not understand the rules, they do not plan, they retreat.
Nigeria cannot afford that retreat if we are to make real progress.
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