The Presidential Fiscal Policy and Tax Reforms Committee has responded sharply to KPMG's critique of Nigeria's new tax laws, stating that most of the issues raised were either misunderstood, wrongly framed, or simply the firm's own preferences presented as errors.
Taiwo Oyedele, who heads the committee, acknowledged only a handful of the 31 concerns as valid - mainly typos and wrong cross-references, while dismissing the bulk as attacks on deliberate policy choices.
Government's Key Pushbacks
On the stock market sell-off warning:
The committee said KPMG got this wrong. The tax rate on gains from selling shares is not a flat 30% as suggested. It ranges from 0% to 30% (set to drop to 25%), and 99% of investors qualify for full exemption. The committee pointed to the stock market hitting all-time highs as proof that investors are not worried.
On taxing indirect share transfers:
This is not a mistakeāit is a deliberate move to close a loophole that multinationals have exploited for years. The committee said this aligns with global standards and dismissed claims it would hurt foreign investment as "disingenuous."
On the forex deduction rule:
The government wants to discourage use of the parallel (black) market for foreign exchange. By blocking tax deductions for the extra cost of buying dollars outside official channels, the policy aims to strengthen the naira and cut down on currency round-tripping. The committee called this "policy congruence, not an error."
On denying deductions when suppliers skip VAT:
The committee defended this as an anti-avoidance measure. It removes the benefit that some businesses got by dealing with VAT-dodging suppliers. Companies can protect themselves by using the self-charge VAT option.
On protecting foreign insurers from WHT:
The committee rejected KPMG's call to exempt overseas insurance companies from withholding tax. Doing so would hurt local insurers who still have to pay tax, creating an unfair playing field in their own market.
On personal income tax rates:
KPMG called the top rates "oppressive." The committee disagreed, noting the effective rate can be as low as 22% for high earners who contribute to pensions. It compared Nigeria's 25% top rate favourably to Ghana (35%), Kenya (35%), South Africa (45%), and the UK (45%).
On the Police Trust Fund:
The committee said KPMG made a factual error. The Police Trust Fund law expired in June 2025 after its six-year lifespan, so there is nothing to repeal.
On VAT exemption for insurance premiums:
The committee said this is already the legal positionāinsurance premiums are not taxable supplies under the law, so no amendment is needed.
Government Criticises KPMG's Approach
The committee took issue with how KPMG raised its concerns publicly rather than engaging directly with officials first:
"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 response also noted that KPMG failed to highlight the positive changes in the new laws, including:
- Corporate tax rate set to fall from 30% to 25%
- Tax exemptions for low earners and small businesses
- Removal of minimum tax on turnover and capital
- Wider input VAT credits for businesses
- Better investment incentives for priority sectors
Issues the Government Did Not Address
Despite the detailed response, several KPMG concerns were left unanswered:
1. Missing deadline for individual tax returns (Section 13 of NTAA) The law requires individuals to file annually but does not say when. Fines apply for late filing. The government response did not address this gap.
2. Hydrocarbon tax rate for deep offshore (Section 72 of NTA) KPMG noted the rate is simply missing from the law. No response was given.
3. Export profit exemption possibly removed (Section 162 of NTA) The certified Act appears to have dropped the tax exemption for non-petroleum export profits. KPMG asked if this was intentional or an error. The government did not clarify.
4. Collective investment scheme confusion (Sections 63(4) and 162(b)) Two sections appear to contradict each other on whether distributions from collective investment schemes are taxed. No clarification was offered.
5. Incomplete paragraphs in the Second Schedule Paragraph 9 on free zone entities is unfinished. The government acknowledged clerical issues exist but did not confirm this specific fix.
6. VAT filing extension vs payment timing (Section 22(2) of NTAA) The law says extensions to file do not extend payment deadlines, but the Tax-Pro Max system requires filing before payment can be made. This practical conflict was not addressed.
7. Definition of "place of consumption" for VAT Critical for free zone transactions and revenue sharing, this term is not defined. The government did not respond.
8. Cost indexation for capital gains KPMG suggested allowing inflation adjustments when calculating gains on asset sales. The government defended the current approach but did not engage with the specific proposal.
9. Stamp duty basis for insurance policies The schedule does not specify whether duty applies to the premium or sum insured. No response was given.
What Happens Next
The committee said some clerical errors have already been spotted internally and will be fixed. For now, it urged businesses and tax professionals to:
- Wait for administrative guidance from the tax authority
- Engage directly with the government rather than public criticism
- Focus on implementation rather than "static critique"
The committee closed by calling the reforms "a bold step toward a self-sustaining and competitive Nigeria" and invited stakeholders to work as partners in making the laws work.
The debate highlights the challenges of overhauling an entire tax system at once and the gap between policy intent and practical application that businesses must now navigate.