Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee has rejected key aspects of a recent critique by KPMG Nigeria on the country’s newly enacted tax laws, insisting that most of the issues raised stem from misinterpretation of policy choices rather than genuine legislative flaws.
In a formal response to KPMG’s publication titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” the committee acknowledged that a few concerns—particularly around implementation risks and minor clerical cross-referencing—were valid.
However, it maintained that the majority of the analysis wrongly framed deliberate policy decisions as technical errors.
The committee stressed that disagreement with government policy direction should not be conflated with claims of legislative gaps.
It noted that several professional firms engaged constructively with the government during the reform process to clarify concerns, rather than publicly characterising policy intent as flawed drafting.
Addressing fears that the new capital gains tax regime could trigger sell-offs in the equities market, the committee dismissed the concerns as overstated.
It clarified that gains on shares are not subject to a blanket 30 per cent tax, but rather a progressive scale ranging from zero to a maximum of 30 per cent, which is expected to be reduced to 25 per cent.
According to the committee, the vast majority of investors qualify for unconditional exemptions, while others can benefit from reinvestment reliefs. It also pointed to strong stock market performance and sustained investor inflows as evidence that the reforms have not undermined market confidence.
The committee defended the introduction of indirect transfer taxation, describing it as a deliberate step aligned with global best practices and international Base Erosion and Profit Shifting (BEPS) standards.
It said the provision was designed to close long-standing loopholes in cross-border transactions and should not be interpreted as a move to discourage foreign investment.
Claims that the rule could destabilise the economy, the committee added, were misleading and failed to reflect its global acceptance.
On foreign exchange, the committee explained that the decision to disallow tax deductions for premiums paid when sourcing FX outside official markets was intentional.
The measure, it said, supports broader monetary policy objectives by discouraging parallel market transactions, curbing round-tripping, and strengthening the naira.
It also justified linking expense deductibility to VAT compliance, describing it as an anti-avoidance tool aimed at discouraging businesses from transacting with suppliers who evade VAT, while promoting compliance across supply chains.
The committee rejected the view that non-resident companies earning income subject to final withholding tax should be exempt from registration and filing requirements.
While certain passive income streams may enjoy conditional exemptions, it clarified that broader compliance obligations remain essential for transparency and data accuracy.
Some of KPMG’s claims were dismissed entirely. The committee noted that the Police Trust Fund Act expired in June 2025, making calls for its repeal irrelevant. It also clarified that small company tax exemptions predate the new tax laws, having been introduced under the Finance Act 2021.
On VAT and insurance premiums, the committee said insurance services do not constitute taxable supplies under existing law, making additional exemptions unnecessary.
The committee said the KPMG analysis overlooked major structural improvements embedded in the new tax framework.
These include a planned reduction in corporate income tax from 30 per cent to 25 per cent, broader input VAT credits, exemptions for low-income earners and small businesses, removal of minimum tax on turnover and capital, and stronger incentives for priority sectors.
While acknowledging that minor drafting inconsistencies can arise in large-scale reforms, the committee emphasised that effective implementation would depend on clear regulations and administrative guidance from tax authorities.
It urged stakeholders to move beyond criticism and engage constructively in refining and implementing the reforms
