Economy
KPMG Identifies Inherent Errors, Inconsistencies, Others in Nigeria’s New Tax Laws
By Aduragbemi Omiyale
The Nigerian arm of global consultancy firm, KPMG, has highlighted some inherent errors, inconsistencies, gaps and omissions in the country’s new tax laws.
In a report on its website, analysed by Business Post, KPMG Nigeria charged the local authorities to address these issues to boost investor confidence.
It noted that while the new tax laws would result in increased revenue for the government, there is always the need to strike a delicate balance between revenue generation and sustainable growth.
“It is, therefore, critical that government review the gaps, omissions, inconsistencies and lacunae highlighted in this newsletter to ensure the attainment of the desired objectives. Government must also seek international cooperation and collaboration to facilitate the sharing of information, build capacity and capability of tax administration in the country,” it said.
Analysing an error in Section 3(b) and (c) of the Nigeria Tax Act (NTA), which dwells on the imposition of tax, the agency said the section specifies persons on whom taxes should be levied, including individuals, families, companies or enterprises, trustees, and an estate, but omits community, which is included in the definition of person under Section 201.
It recommended that, “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.
It also pointed out that Section 6(2) of the NTA on Controlled Foreign Companies (CFC), 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 per cent).
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 Nigeria advised the government to “modify the section by providing clarity on the treatment of foreign and local dividends.”
On Section 20(4) of the NTA focusing on deductions allowed, it 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).
This implies that where a business buys forex at a rate that is higher than the official rate, such company cannot claim tax deduction for the difference in value between the official and the other rates.
The intention is to discourage speculative foreign exchange transactions and encourage the appreciation of the Naira. However, issues surrounding the accessibility of all forex needs due to supply problems have not been fully considered.
It recommended that, “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.”
As for the next section, which dwells on deductions not allowed, it includes expenses on which VAT has 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 called for the removal of this section, saying “the only criteria should be that any expense that is wholly and exclusively incurred for business purposes should be allowable for tax purposes.”
Other sections it found errors in include Section 17(3)(c) of the NTA on taxation of non-resident persons, Section 27 of the NTA on the ascertainment of total profits of companies, Section 30 of the NTA on the ascertainment of chargeable income of an individual, Sections 39 and 40 of the NTA on computation of chargeable gains, Section 47 of the NTA on indirect transfer of ownership of companies or assets, Section 63(4) / 162(b) of the NTA on collective investment scheme, amongst others.
By Dipo Olowookere
A further 0.99 per cent was gained by the Nigerian Exchange (NGX) Limited on Friday after a positive market breadth index supported by 53 price gainers, which outweighed 23 price losers, representing bullish investor sentiment.
During the trading day, the trio of Jaiz Bank, Fidson, and NPF Microfinance Bank chalked up 10.00 per cent each to sell for N11.00, N86.90, and N6.27, respectively, while Deap Capital appreciated by 9.96 per cent to N7.62, and Mutual Benefits increased by 9.94 per cent to N5.42.
Conversely, Secure Electronic Technology shed 10.00 per cent to trade at N1.62, Sovereign Trust Insurance slipped by 9.73 per cent to N2.32, Ellah Lakes declined by 7.91 per cent to N12.80, International Energy Insurance retreated by 5.56 per cent to N3.40, and ABC Transport moderated by 5.26 per cent to N9.00.
Data from Customs Street revealed that the insurance counter was up by 2.52 per cent, the industrial goods sector grew by 2.28 per cent, the banking space expanded by 1.43 per cent, the consumer goods index gained 1.23 per cent, and the energy industry rose by 0.05 per cent.
As a result, the All-Share Index (ASI) went up by 1,916.20 points to 194,989.77 points from 193,073.57 points, and the market capitalisation moved up by N1.230 trillion to N125.164 trillion from Thursday’s N123.934 trillion.
Yesterday, investors traded 820.5 million stocks valued at N28.3 billion in 63,507 deals compared with the 898.5 million stocks worth N38.5 billion executed in 61,953 deals, showing a jump in the number of deals by 2.51 per cent, and a shortfall in the trading volume and value by 8.68 per cent and 26.49 per cent apiece.
Closing the session as the most active equity was Mutual Benefits with 79.0 million units worth N427.1 million, Zenith Bank traded 44.0 million units valued at N3.8 billion, Chams exchanged 43.9 million units for N182.0 million, AIICO Insurance transacted 42.4 million units valued at N179.8 million, and Veritas Kapital sold 36.0 million units worth N90.6 million.
By Adedapo Adesanya
The price of Brent crude oil grade went up by 0.14 per cent or 10 cents to $71.76 per barrel on Friday as investors worried about US military action against Iran, as President Donald Trump presses the Islamic Republic to halt nuclear weapon development.
However, the US West Texas Intermediate (WTI) crude oil grade finished at $66.39 a barrel after going down by 4 cents or 0.06 per cent.
The market awaited developments in the struggle between Iran and the US after President Trump said, “We have to make a meaningful deal, otherwise bad things happen,” referring to Iran.
The main concern for the crude oil market is that military activity will lead to a supply disruption if Iran decides to block shipping in the Strait of Hormuz. About 20 per cent of the world’s oil consumption passes through that waterway. Conflict in the area could limit oil entering the global market and push up prices.
There is the fear that a potential US military campaign in Iran could disrupt shipping in the Middle East are also adding upward pressure on supertanker rates.
Traders and investors ramped up purchases of call options on Brent crude in recent days, betting on higher prices.
Also supporting oil were reports of falling crude stocks and limited exports in the world’s biggest oil-producing and exporting countries. US crude inventories dropped by 9 million barrels as refining utilisation and exports climbed, an Energy Information Administration (EIA) report showed on Thursday.
Markets were also considering the impact of ample supply, with talks of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) leaning towards a resumption in oil output increases from April.
Eight OPEC+ producers – Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria and Oman will meet on March 1. The eight members raised production quotas by about 2.9 million barrels per day from April to the end of December 2025, equating to about 3 per cent of global demand, and froze further planned increases for January through March 2026 because of seasonally weaker consumption.
Meanwhile, the oil market shrugged off a US Supreme Court decision ruling unconstitutional President Trump’s use of a law to levy tariffs in national emergencies.
By Adedapo Adesanya
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has faulted the Executive Order signed by President Bola Tinubu on oil and gas revenues.
President Tinubu this week signed the Executive Order, titled The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), to safeguard and enhance oil and gas revenues for the Federation, curb wasteful spending, eliminate duplicative structures in the sector, and redirect resources for the benefit of the Nigerian people.
However, at a press conference in Abuja, PENGASSAN president, Mr Festus Osifo, argued that the tax incentives granted to oil companies by the President may not help in the reduction of cost if insecurity is not addressed.
“The Executive Order signed by the President yesterday is a direct attack on the provisions of the Petroleum Industry Act (PIA)—specifically Sections 8, 9, and 64,” Mr Osifo said.
“What the President has done is use an Executive Order to set aside a law of the Federal Republic of Nigeria. This is deeply troubling. What signal are we sending to investors and the international community?
“We are effectively telling them that the law of the land can be set aside by a simple executive decree. This is an aberration and should never have happened.”
According to a statement by the presidential spokesperson, Mr Bayo Onanuga, the President signed the EO in pursuance of Section 5 of the Constitution of the Federal Republic of Nigeria (as amended).
The Executive Order is anchored on Section 44(3) of the Constitution, which vests ownership, control, and derivative rights in all minerals, mineral oils, and natural gas in, under, and upon any land in Nigeria—including its territorial waters and Exclusive Economic Zone—in the Government of the Federation.
The directive seeks to restore the constitutional revenue entitlements of the federal, state, and local governments, which were removed in 2021 by the Petroleum Industry Act (PIA).
According to Mr Onanuga, the PIA created structural and legal channels through which substantial Federation revenues are lost via deductions, sundry charges, and fees.
Under the current PIA framework, NNPC Limited retains 30 per cent of the Federation’s oil revenues as a management fee on Profit Oil and Profit Gas derived from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts. Additionally, the company retains 20 per cent of its profits for working capital and future investments.
The federal government considers the additional 30 per cent management fee unjustified, as the 20 per cent retained earnings are already sufficient to support NNPC Limited’s functions under these contracts.
Moreover, NNPC Limited also retains another 30 per cent of profit oil and profit gas under the Frontier Exploration Fund, as stipulated in sections 9(4) and (5) of the PIA.
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