The Presidential Fiscal Policy and Tax Reforms Committee has dismissed key elements of a recent publication by KPMG on Nigeria’s newly enacted tax laws, describing much of the analysis as a misreading of policy intent and a conflation of professional preferences with factual errors.
In a detailed response released on Saturday, the committee said it welcomed constructive scrutiny of the reforms, acknowledging that some of KPMG’s observations—particularly those relating to implementation risks and clerical cross-referencing—were valid. However, it maintained that the bulk of the firm’s commentary reflected misunderstandings of deliberate policy choices and broader reform objectives.
According to the committee, several issues labelled by KPMG as “errors” or “omissions” were either based on incorrect conclusions, inadequate contextual understanding, or disagreements with policy direction rather than genuine legislative gaps. It argued that such disagreements should not be presented as technical flaws.
Addressing concerns over the taxation of share disposals, the committee rejected claims that the reforms would trigger a stock market sell-off. It clarified that gains on shares are subject to a graduated rate ranging from zero to a maximum of 30 per cent—set to reduce to 25 per cent—with about 99 per cent of investors enjoying unconditional exemptions. The committee noted that the Nigerian stock market’s record performance underscored investor confidence in the reforms.
On the issue of commencement dates, the committee said proposals to align the start of the law strictly with accounting periods failed to account for the complexity of transitional tax issues spanning multiple assessment bases, audits, credits, and penalties.
The response also defended provisions on the taxation of indirect share transfers, describing them as consistent with global best practices and international anti-avoidance standards, particularly the Base Erosion and Profit Shifting (BEPS) framework. Claims that such rules could undermine economic stability were described as misleading.
KPMG’s call for explicit VAT exemption on insurance premiums was dismissed as unnecessary, with the committee explaining that insurance premiums are not classified as taxable supplies under Nigerian tax law and have historically been treated as such.
The committee further addressed what it described as misinterpretations by KPMG on issues including the definition of “person” in the law, the composition of the Joint Revenue Board, the treatment of foreign dividends, and registration requirements for non-resident taxpayers. In each case, it stressed that the provisions were intentional, grounded in established legislative drafting principles, and aligned with long-standing tax administration practice.
It also criticised some proposals by KPMG as potentially harmful to core reform objectives. These included suggestions to exempt foreign insurance firms from taxes on Nigerian-sourced premiums, which the committee said would disadvantage local insurers, and objections to the denial of tax deductions for foreign exchange purchased at parallel market rates—a policy designed to support monetary stability and discourage currency arbitrage.
On personal income tax, the committee defended the new progressive structure, including a 25 per cent top marginal rate for high earners. It argued that the effective rate could be lower and remained competitive internationally, while helping to rebalance Nigeria’s tax burden by easing pressure on businesses through lower corporate tax rates.
The committee also faulted KPMG for what it called factual errors, including references to the Police Trust Fund, which expired by law in mid-2025, and concerns about small-company tax exemptions that pre-dated the new legislation.
Beyond its criticisms, the committee said KPMG failed to adequately highlight major gains under the reforms, such as tax harmonisation, expanded VAT credits, exemptions for low-income earners and small businesses, the elimination of minimum turnover taxes, and enhanced investment incentives.
Concluding, the committee stressed that the reforms emerged from extensive stakeholder consultations and public legislative processes. While acknowledging that minor clerical issues may arise in any comprehensive overhaul, it said these were already being addressed through administrative guidance and regulations.
It called on stakeholders to move beyond what it described as “static critique” and instead engage constructively with government to ensure effective implementation of the new tax regime, which it characterised as a decisive step toward a more competitive and self-sustaining Nigerian economy.
