The Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, has faulted key observations made by KPMG on Nigeria’s newly enacted tax laws.
This is according to an official response issued by the committee on Saturday and posted on X. This follows KPMG’s earlier publication highlighting what it described as gaps, errors, and risks in the new tax framework.
The committee argues that most of the issues raised reflect misunderstandings of policy intent rather than genuine errors.
The response comes amid growing debate within Nigeria’s business and professional community over the implications of the wide-ranging tax overhaul signed into law in 2025.
What they are saying
According to the committee, many of the issues labelled by KPMG as “errors,” “gaps,” or “omissions” fall into five broad categories: the firm’s own analytical errors, failure to properly understand the reforms, missed reform context, disagreement with deliberate policy choices, and clerical issues already identified internally.
“While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps.
“KPMG would have been more effective if the firm adopted a similar approach like other professional firms who engaged directly providing the opportunity for clarifications and mutual learning,” the committee stated.
On capital market concerns, the committee dismissed suggestions that the taxation of chargeable gains on shares would trigger selloffs, noting that the effective tax rate ranges from 0% to a maximum of 30%, set to reduce to 25%, with about 99% of investors qualifying for unconditional exemption.
- It added that recent stock market performance—at record highs—shows investors understand the reforms will improve corporate fundamentals.
- The committee also defended the decision to tax indirect transfers of shares, describing it as a globally accepted anti-avoidance measure aligned with BEPS standards, rather than a threat to competitiveness.
- On VAT, it clarified that insurance premiums are not taxable supplies under Nigerian law, making calls for explicit VAT exemption unnecessary.
Other areas addressed include the composition of the Joint Revenue Board, dividend treatment for foreign versus Nigerian companies, non-resident registration requirements, and the inclusion of “community” in statutory definitions all of which the committee said were intentional and consistent with modern legislative drafting and tax policy.
Why this matter
Nigeria’s new tax laws represent one of the most ambitious fiscal reforms in recent years, aimed at improving fairness, boosting investment, and reducing the tax burden on businesses and low-income earners.
How these laws are interpreted by investors, tax advisers, and administrators will significantly influence compliance levels, capital flows, and overall economic confidence.
The sharp exchange between the reform committee and KPMG highlights the tension between policy design and professional interpretation at a time when Nigeria is seeking to reposition its economy for sustainable growth.
Backstory
In its earlier report, KPMG raised concerns over several aspects of the new tax laws, including the taxation of share disposals, commencement dates for implementation, indirect transfer of shares, VAT treatment of insurance premiums, dividend taxation, non-resident registration requirements, and the impact of higher personal income tax rates on competitiveness.
- The firm warned that some provisions could create uncertainty for investors, weaken competitiveness, or introduce administrative complexity if not amended or clarified.
- KPMG also proposed exemptions and changes—such as preferential treatment for foreign insurance companies and deductibility of parallel market FX costs—which it argued could support investment and compliance.
