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From Juliana Taiwo-Obalonye, Abuja
Presidential Fiscal Policy and Tax Reforms Committee has issued a strong rebuttal to KPMG’s analysis of Nigeria’s new tax laws, labeling most criticisms as misunderstandings of deliberate policy choices rather than genuine flaws. Released today, the statement welcomes useful input on implementation risks and clerical issues but accuses the firm of framing preferences as facts. “We welcome all perspectives that contribute to a shared understanding and successful implementation of the new tax laws. However, the majority of the publication reflected a misunderstanding of the policy intent, a mischaracterisation of deliberate policy choices, and, in several instances, the repetition of opinions and preferences as facts,” the committee stated.
A significant share of KPMG’s flagged “errors, gaps, or omissions” stems from the firm’s own missteps or overlooked context, the response asserts. “While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps,” it notes, urging direct engagement like other firms for clarifications. On share gains taxation, which KPMG tied to potential stock market sell-offs, the committee clarifies: “Contrary to the presumption that the new tax provisions on chargeable gains would trigger a sell-off on the stock market, the fact is that the applicable tax rate on share gains is not a flat 30%. The tax framework is structured from 0% to a maximum of 30%, which is set to reduce to 25%. Furthermore, a significant majority of investors (99%) are entitled to unconditional exemption, with others qualifying subject to reinvestment.” The market’s record highs and rising investments prove the changes bolster firm profitability, it adds, dismissing sell-off fears as baseless since December 2025 disposals qualified for reinvestment relief.
The committee defends the laws’ commencement and transition rules against calls for a uniform start like January 1, 2026, calling such views too narrow amid complex audits, deductions, and penalties spanning periods. Indirect share transfers align with global BEPS standards to close multinational loopholes without harming competitiveness, countering KPMG’s stability concerns as “disingenuous.” A proposed VAT exemption for insurance premiums is deemed redundant: “KPMG’s point… is technically unnecessary, as an insurance premium is not a ‘taxable supply’ defined under the Nigeria Tax Act.”
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Addressing perceived gaps, the response explains that “community” in the “person” definition applies throughout via standard statutory rules, streamlining drafting without redundancy. The Joint Revenue Board’s makeup intentionally prioritizes revenue agencies for subnational advice, mirroring past effective models. Dividend distinctions between local and foreign firms reflect their tax differences: “Dividends distributed by a foreign company cannot be ‘franked’ since no Nigerian Withholding Tax (WHT) would have been deducted.”
KPMG proposals risking reform goals face rejection, including exempting foreign insurers from Nigerian-risk premiums, which would disadvantage locals: “This would create an unfair and harmful competitive disadvantage for local firms in their own market.” Parallel-market forex deductions are blocked to curb round-tripping and support Naira stability: “By removing the tax subsidy… the policy aims to reduce incentives for round-tripping and redirect legitimate FX demands to the official market. This is policy congruence, not an error.” VAT-linked deductibility enforces compliance: “It removes the advantage that some taxpayers previously enjoyed by patronising suppliers who evade VAT.”
Progressivity in personal income tax, with a 25% top rate (effective 22% after pensions), stays competitive versus Ghana’s 35% or the U.S. federal 37%, balancing high-earner contributions with corporate cuts from 30% to 25%. Factual errors include urging repeal of the expired Police Trust Fund levy and misstating small-firm exemptions predating these laws.
While KPMG noted reform aims, it overlooked gains like harmonization, VAT credit expansions, low-earner exemptions, scrapped minimum taxes, and sector incentives. “A balanced assessment would have recognised these transformative elements,” the committee says. Extensive stakeholder consultations preceded passage, with clerical fixes underway. “The tax reform represents a bold step toward a self-sustaining and competitive Nigeria,” it concludes, calling for collaborative implementation over critiques: “We urge all stakeholders to shift from a static critique to a dynamic engagement model that enables clarification and a productive partnership.”
