• KPMG flags gaps, ambiguities; Budget Office DG dismisses ‘wrong notions’
• Ex-CBN dep gov defends Tinubu’s reforms, says economy showing resilience

Nigeria’s new tax laws have reopened a sharp fault line between expert warnings and official assurances, with auditors flagging risks of disputes and capital flight, even as the government insists the reforms protect the poor and underpin economic recovery.

Professional audit firm KPMG warned that ambiguities, inconsistencies and policy gaps in Nigeria’s newly enacted tax laws could lead to disputes with tax authorities, discourage investment and potentially trigger capital flight, particularly among high-net-worth individuals and corporate investors.

The firm raised the concerns in a report titled ‘Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,’ which reviews key provisions of the Nigeria Tax Act (NTA) that took effect on January 1, 2026.

KPMG said that although the law is intended to modernise Nigeria’s tax framework and improve revenue mobilisation, several unclear provisions risk undermining those objectives if not urgently addressed.

One of the major issues identified relates to Section 27 of the Act, which governs how companies determine total profits for tax purposes. KPMG noted that the provision does not clearly state whether capital losses, excluding those arising from the disposal of digital or virtual assets, are deductible.

While the firm said the apparent intention of the law is to allow such deductions, the absence of explicit wording could result in conflicting interpretations between taxpayers and tax authorities, potentially leading to disputes and prolonged litigation.

“The NTA is not definite on whether capital loss, other than that arising from the disposal of digital or virtual assets, is deductible. However, we believe that the intention is for such losses to be deductible,” KPMG said, advising the Federal Government to modify the law to clearly specify the deduction of capital losses.

The firm also criticised Section 30 of the Act, which outlines deductions for individual chargeable income, describing its scope as narrow. Under the provision, allowable deductions are largely limited to contributions to the National Housing Fund, National Health Insurance Scheme and pension schemes.

KPMG noted that while annuities, life insurance premiums, mortgage interest on owner-occupied residential properties and rent relief of 20 per cent of annual rent capped at N500,000 are recognised, the thresholds may be perceived as restrictive, particularly by high-income earners.

“Where citizens deem the provisions of the tax law to be oppressive, it may lead to non-compliance and capital flight as wealthy individuals relocate to lower-tax jurisdictions,” the firm warned.

Further concerns were raised over Sections 39 and 40, which calculate capital gains based on the difference between sales proceeds and the tax-written-down value of assets without adjusting for inflation.

Given Nigeria’s high inflation environment, KPMG said this approach could result in significant tax liabilities even where real economic gains are minimal. “Consequently, any sale of assets after the effective date of the NTA will trigger a substantial exposure to income tax,” it said.

To address this, the firm recommended the introduction of a cost indexation allowance based on the Consumer Price Index from the date of acquisition to disposal, using December 31, 2025, as a baseline. It said such an adjustment would better align tax obligations with economic realities without increasing capital losses.

KPMG warned that unresolved gaps and ambiguities in the NTA could weaken Nigeria’s investment climate, burden taxpayers and authorities with costly disputes, and ultimately slow economic growth while undermining revenue generation needed for development.

Budget Office DG dismisses ‘wrong notions’ about new tax laws, says poor protected
However, the Director-General of the Budget Office of the Federation, Tanimu Yakubu, dismissed what he described as “wrong notions and stage-managed arithmetic” surrounding Nigeria’s new tax laws, saying claims that the reforms would impose fresh burdens on the poor are based on selective accounting and misrepresentation.

Yakubu, in a detailed rejoinder to a widely circulated essay critical of the reforms, said the narrative branding the policy as “Bola’s tax” deliberately ignored key provisions designed to shield low-income earners. He said the argument relied more on emotional framing than on the actual structure of the tax schedule approved under the new regime.

According to him, a central flaw in the criticism is a “category error” in which pension and health insurance contributions were wrongly presented as taxes.

Yakubu stressed that pension payments are deferred wages owned by workers and lodged in their Retirement Savings Accounts, while health insurance premiums are contributions that purchase defined coverage, not compulsory levies for general government spending.

“A deduction is not a tax, and a contribution you own is not a levy you lose,” he said, adding that such deductions reduce taxable income and reflect efforts to protect workers’ welfare rather than exploit it.

Yakubu said the most critical omission in the criticism was the N800,000 annual tax-free threshold under the new personal income tax structure, noting that the first N800,000 of annual income attracts a zero per cent tax rate, a provision he described as “the hinge on which liability turns”.

Using the example of a worker earning N75,000 monthly, he said such a person earns N900,000 annually, placing only N100,000 above the zero-rated band.

Even at a 15 per cent rate on that excess, he said the tax exposure would amount to N15,000 a year before deductions, adding that once pension contributions are applied, the taxable portion drops sharply and could fall to zero if other allowable deductions, such as health insurance, are included.

Yakubu also faulted the use of global poverty lines in the criticism, saying the World Bank’s $4.20-a-day benchmark is a purchasing power parity measure, not a nominal wage threshold that can be converted directly into naira using market exchange rates. He said such conversions turn technical welfare metrics into political talking points.

Addressing claims that “widening the tax base” necessarily means taxing the poor, Yakubu described the argument as a false syllogism. He said tax base expansion could involve bringing non-compliant high earners into the net, closing loopholes, capturing affluent segments of the digital and informal economy, and strengthening employer withholding, rather than targeting subsistence incomes.

Yakubu added that long lists of alleged corruption and mismanagement, while raising legitimate governance concerns, do not invalidate the structure of a tax schedule.

He said accountability concerns should be addressed through improved transparency, auditing and enforcement, not by misrepresenting reforms aimed at reducing Nigeria’s reliance on borrowing.

“The outrage depends on omitting the very thresholds and concepts that make its conclusion collapse,” Yakubu said, insisting that the new tax structure explicitly protects low incomes and that claims to the contrary are driven more by narrative devices than by arithmetic grounded in law.

Ex-CBN deputy gov defends Tinubu’s reforms, says economy showing resilience
Also, a former Deputy Governor of the Central Bank of Nigeria (CBN), Tunde Lemo, yesterday said Nigeria’s economy is gradually stabilising, insisting the country is now “seeing light at the end of the tunnel” after a difficult year of reforms.

Lemo said Nigeria would have gone bankrupt but for the painful economic reforms and tax regime introduced by President Bola Tinubu. Speaking on Frontline, a current affairs programme on Eagle 102.5 FM, Ilese-Ijebu, which was monitored by The Guardian, the former banker described the economy as resilient, citing declining inflation figures, improved exchange rate stability and easing food pressures towards the end of 2025.

He acknowledged that prices remain high but said inflation has been trending downwards, with both headline and food inflation consistently easing.

According to him, December 2025 marked a turning point as Nigerians no longer had to queue for food, a development he attributed to the removal of fuel subsidy.

“For the first time in December, we didn’t need to queue up for food. Those who bought right will tell you prices were about 20 per cent cheaper than the previous year,” he said.

Maintaining that the economic reforms introduced at President Tinubu’s inauguration are already yielding dividends despite the initial shocks, Lemo said: “So you can see that the reform that Mr President started with on his day of inauguration, we are already reaping the benefits.

“Yes, subsidy has been taken away, there were price spikes when that happened, but that has brought in sufficient product for us, so much so now that we don’t have to be running helter-skelter and looking for wealth. And then of course, prices are trending downwards.”

Defending the new tax regime and dismissing claims that its timing is wrong, he said: “When will it be the right time to pay tax? It is only in Nigeria that people do not want to pay tax but want the government to provide everything.”

He argued that taxation is essential to governance and warned against excessive borrowing or central bank financing, which he said fuels inflation. “Government largely spends tax money in other climes. If we don’t pay tax, where do we expect funding to come from?” he asked.

Lemo added that traders with annual turnover below N100 million are fully exempt from tax. “Would a woman selling pepper by the roadside make N100 million a year? The new tax law protects the poor more than the rich. The elites are the most vocal in this criticism. The poor don’t even have access to these conversations. The elites are using them as mouthpieces,” he said.