Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee has issued a strong rebuttal to KPMG’s analysis of the country’s newly enacted tax laws, describing most of the firm’s criticisms as misunderstandings of deliberate policy choices rather than genuine flaws.
In a statement released on Friday, the committee said it welcomed constructive feedback on implementation risks and clerical issues but faulted KPMG for presenting policy preferences as factual errors.
“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.
Committee Faults Framing of ‘Errors’
According to the committee, a significant number of the “errors, gaps, or omissions” flagged by KPMG stemmed from overlooked context or analytical missteps by the firm.
It stressed that disagreement with policy direction should not be framed as legislative defects, urging professional firms to engage directly with policymakers for clarification, as others had done.
“While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps,” the statement added.
Share Gains Tax and Market Impact
Responding to KPMG’s warning that the new chargeable gains provisions could trigger stock market sell-offs, the committee said the assessment was inaccurate.
It clarified that the applicable tax on share gains is not a flat 30%, but a graduated framework ranging from 0% to a maximum of 30%, which is set to reduce to 25%.
“A significant majority of investors about 99% — are entitled to unconditional exemption, while others qualify subject to reinvestment,” the committee said.
It added that record market highs and rising investments since the reforms were introduced contradict fears of sell-offs, noting that share disposals made after December 2025 qualified for reinvestment relief.
Commencement Dates and Global Standards
The committee also rejected calls for a uniform commencement date, such as January 1, 2026, arguing that tax audits, deductions, penalties, and transitional rules span multiple accounting periods and require flexibility.
On indirect share transfers, the committee said the provisions align with global Base Erosion and Profit Shifting (BEPS) standards, closing multinational loopholes without undermining Nigeria’s competitiveness. It described KPMG’s stability concerns on the issue as “disingenuous.”
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VAT, Insurance, and Structural Provisions
Addressing VAT-related concerns, the committee dismissed KPMG’s proposal for a VAT exemption on insurance premiums as redundant.
“An insurance premium is not a ‘taxable supply’ as defined under the Nigeria Tax Act,” the statement said.
It further explained that references to “community” within the definition of “person” apply throughout the legislation under standard statutory interpretation rules, avoiding unnecessary repetition.
The composition of the Joint Revenue Board, it said, was intentionally structured to prioritise revenue agencies for subnational advisory roles, reflecting models that had previously proven effective.
Forex, Dividends, and Compliance Measures
The committee defended distinctions between dividends paid by local and foreign companies, noting that dividends from foreign firms cannot be franked since no Nigerian withholding tax is deducted.
It also rejected proposals to allow deductions for parallel-market foreign exchange transactions, stating that the restriction was aimed at curbing round-tripping and Naira instability.
“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.”
Similarly, VAT-linked deductibility rules were designed to strengthen compliance by discouraging patronage of suppliers who evade VAT.
“It removes the advantage that some taxpayers previously enjoyed by patronising suppliers who evade VAT,” the committee concluded.
