By Joy Onu
Abuja, Nigeria – The Presidential Fiscal Policy and Tax Reforms Committee has issued a detailed response to observations made by global audit firm KPMG regarding Nigeria’s recently enacted tax laws, saying much of the firm’s analysis misrepresented the intent and objectives of the reforms. While the committee acknowledged that certain points raised by KPMG, particularly those relating to implementation risks and minor clerical issues, were valid, it stressed that the majority of the critique reflected misunderstandings, mis-characterisations of deliberate policy choices, and repeated personal opinions presented as facts.
The committee noted that a significant number of issues described by KPMG as “errors,” “gaps,” or “omissions” were either mistakes on the firm’s part, a result of insufficient understanding of broader reform objectives, or simple clerical and editorial matters already addressed internally. It emphasised that disagreements with policy choices are legitimate but should not be framed as errors, and highlighted that other professional firms engaged with the reforms directly to clarify points and foster mutual learning.
Addressing specific policy areas, the committee clarified that the new provisions on taxation of shares would not trigger a sell-off in the stock market. The applicable tax rates range from 0% to a maximum of 30%, which is planned to reduce to 25%, and 99% of investors are entitled to unconditional exemptions, while others qualify under reinvestment conditions. The committee noted that market performance at all-time highs and increased investment flows reflect investor understanding that the reforms will strengthen corporate profitability and cash flows. Similarly, the commencement of the law cannot be limited to the start of an accounting period, as the transition involves multiple periods, audit considerations, deductions, credits, and penalties, making KPMG’s suggested approach impractical.
The committee defended provisions such as the taxation of indirect share transfers, VAT treatment of insurance premiums, and distinctions in dividend taxation, stating these reflect deliberate policy choices aligned with global best practices. It also clarified that concerns regarding the inclusion of “community” in the definition of a ‘person,’ the composition of the Joint Revenue Board, non-resident registration, and treatment of dividends by foreign companies, were based on misunderstandings of statutory interpretation and the broader policy framework.
Several KPMG proposals were criticised as potentially undermining key reform objectives. These included exempting foreign insurance companies from taxes on premiums written in Nigeria, permitting tax deductions for parallel market forex purchases, disregarding VAT compliance-linked deductions, and lowering the top marginal personal income tax rate. The committee argued that these suggestions would create unfair competitive advantages, compromise fiscal policy goals, and weaken progressivity, while the current measures support fairness, business formalisation, and market stability.
The committee also corrected factual errors in KPMG’s analysis, noting that the Police Trust Fund provision cited no longer exists and that issues around small company exemptions predate the new law. It further highlighted significant structural improvements in the reforms that KPMG overlooked, including harmonised tax frameworks, reductions in corporate tax, expanded VAT credits, exemptions for low-income earners and small businesses, elimination of minimum tax, and improved investment incentives for priority sectors. The committee concluded that the reforms, developed through extensive stakeholder consultation and legislative processes, represent a bold step toward a self-sustaining and competitive Nigeria. It urged stakeholders to engage constructively with the implementation process, emphasising that administrative guidance, clarifications from the tax authority, and complementary regulations will ensure the law’s effectiveness and alignment with economic development and global competitiveness.
