The Presidential Fiscal Policy and Tax Reforms Committee has rejected a recent analysis by global professional services firm KPMG on Nigeria’s newly enacted tax laws, saying the firm misunderstood key policy objectives and mischaracterised deliberate reforms as errors.
KPMG had raised concerns about what it described as multiple gaps and mistakes in the new tax framework, calling for an urgent government review. Among its claims was that Section 6(2) of the Nigeria Tax Act (NTA) could lead to double taxation of foreign companies, and that provisions on dividend taxation required clarification.
The firm also argued that undistributed foreign profits deemed as “distributed” and included in the profits of Nigerian companies could attract income tax at 30 per cent. In addition, KPMG called for amendments to Section 6(1) of the Nigeria Tax Administration Act (NTAA) 2025 to exempt non-resident companies subject to final withholding tax from tax registration, aligning it with existing provisions on filing exemptions.
However, responding yesterday, the committee’s chairman, Mr Taiwo Oyedele, said much of KPMG’s assessment was based on policy misinterpretation, incomplete understanding and the presentation of opinion as fact.
Oyedele acknowledged that some issues raised—particularly around implementation risks and clerical inconsistencies—were useful, but said the bulk of the analysis failed to place the reforms within their broader fiscal and economic context.
He stressed that several matters labelled as “errors” or “omissions” reflected preferences for alternative policy outcomes rather than actual flaws in the law. According to him, disagreement with policy direction should not be framed as technical error, noting that other professional firms had engaged more constructively with policymakers.
Oyedele said the new tax laws reflect deliberate policy choices designed to meet clearly defined reform objectives, including tax simplification, harmonisation and improved compliance.
Addressing concerns about the stock market, he dismissed fears that the revised chargeable gains provisions would trigger a sell-off. He explained that gains on shares would be taxed at rates ranging from zero to a maximum of 30 per cent—expected to fall to 25 per cent—and that about 99 per cent of investors qualify for unconditional exemption, with others eligible subject to reinvestment.
“The stock market is currently at an all-time high with increased investment flows, showing that investors understand these reforms strengthen company fundamentals and cash flows,” Oyedele said.
On the commencement date of the new laws, he argued that aligning implementation strictly with accounting periods ignored the complexity of a comprehensive tax overhaul involving multiple assessment bases, deductions, credits and penalties.
He also defended provisions on indirect transfer of shares, describing them as consistent with global best practices aimed at curbing base erosion and profit shifting, and dismissed claims that they could threaten economic stability as misleading.
On value-added tax, Oyedele said calls for an explicit VAT exemption on insurance premiums were unnecessary, noting that insurance premiums do not constitute a taxable supply under Nigerian law. He also defended the inclusion of “community” in the definition of a taxable person, saying it aligned with modern legislative drafting standards.
Responding to concerns over dividend taxation, Oyedele said KPMG appeared to conflate foreign-controlled companies with foreign operations of Nigerian companies, explaining that different dividend treatments were a deliberate and logical policy distinction.
On non-resident taxation, he rejected the assumption that final withholding tax eliminates registration or filing obligations, noting that tax returns serve compliance and information purposes beyond revenue collection.
Oyedele also opposed proposals to exempt foreign insurance firms from tax on premiums written in Nigeria, warning that such a move would disadvantage local insurers. He defended the restriction on deducting foreign exchange expenses sourced from the parallel market, describing it as a fiscal measure aligned with monetary policy to discourage round-tripping and support naira stability.
He further explained that linking deductibility of expenses to VAT compliance was an anti-avoidance measure designed to promote fairness and voluntary compliance.
On personal income tax, Oyedele said criticisms of the 25 per cent top marginal rate ignored reliefs that significantly lower effective tax rates for high earners. He noted that the rate compares favourably with those in other African and advanced economies and complements the planned reduction in corporate tax to support business formalisation.
He also pointed out factual inaccuracies in KPMG’s report, including references to the Police Trust Fund, which expired in June 2025, and noted that concerns about small company tax thresholds predated the new laws.
Oyedele said the reforms introduced major structural improvements, including the removal of minimum tax on turnover and capital, expanded VAT input credits, exemptions for low-income earners and small businesses, and stronger incentives for priority sectors.
He concluded that while minor clerical issues could arise in any wide-ranging reform, such matters were already being addressed. He urged stakeholders to shift from static criticism to constructive collaboration to ensure effective implementation and support Nigeria’s goal of building a competitive, self-sustaining economy.
