Table of Contents
- Response to KPMG's Publication
- Clarification on Taxation of Shares
- Commencement Date of the Laws
- Taxing Indirect Transfers
- VAT and Insurance Premiums
- Personal Income Tax
- Conclusion
The Presidential Fiscal Policy and Tax Reforms Committee has issued a response to a recent report by KPMG regarding Nigeria’s newly enacted tax laws.
It is important to note that concerns about Nigeria’s new tax laws began with their implementation on January 1, 2026.
In a statement released on X on Saturday by the Chairman of the Tax Committee, Taiwo Oyedele, it was indicated that much of KPMG’s perspective stemmed from misunderstandings of policy intentions and intentional reform choices, rather than actual errors or gaps.
The committee expressed its openness to constructive feedback on the tax reforms and recognized that some of KPMG’s observations related to implementation risks and clerical or cross-referencing issues were indeed valuable. Nevertheless, it contended that most claims presented as “errors” or “omissions” were either invalid conclusions, misinterpretations of the law, or merely differences in policy preferences.
According to the committee, disagreements regarding policy direction should not be framed as technical flaws, emphasizing that more productive discussions would have included direct consultations, similar to those employed by other professional firms.
In addressing concerns regarding the taxation of shares, the committee clarified that the new chargeable gains framework does not impose a flat 30 percent tax on share sales. Instead, it operates on a graduated scale ranging from zero to a maximum of 30 percent, which will decrease to 25 percent, with approximately 99 percent of investors receiving unconditional exemptions. The committee noted that the stock market's record-high performance contradicts claims that the reforms would lead to a sell-off.
Regarding the commencement date of the laws, the committee dismissed suggestions that reforms should only commence at the beginning of an accounting year, arguing that such an approach overlooks the complexities involved in transitioning across various tax bases, accounting periods, and ongoing transactions.
The committee also defended the provisions taxing indirect transfers of shares, stating that they align with global best practices and aim to close loopholes that have long been exploited by multinationals. It rejected claims that this measure could undermine economic stability.
In response to comments about VAT and insurance premiums, the committee clarified that insurance premiums are not classified as taxable supplies under Nigerian tax law, rendering calls for a specific exemption unnecessary.
Many of KPMG’s observations were described as misunderstandings, including issues related to the definition of “community” as a taxable entity, the composition of the Joint Revenue Board, and the treatment of dividends from both foreign and Nigerian companies. The committee asserted that these were intentional drafting and policy choices consistent with international standards.
It also rejected proposals to exempt foreign insurance companies from taxation on Nigerian-written premiums, cautioning that such a move would disadvantage local firms. Similarly, it defended the disallowance of tax deductions on foreign exchange purchased at parallel market rates, stating that this policy supports efforts to stabilize the naira and prevent round-tripping.
On personal income tax, the committee countered claims that the new top marginal rate of 25 percent is excessive, noting that effective rates could be lower and remain competitive compared to several African and developed economies.
The committee further accused KPMG of factual inaccuracies, including references to the Police Trust Fund, which it stated had expired in 2025, as well as issues surrounding small company tax exemptions that existed prior to the new laws.
While critiquing the publication, the committee noted that KPMG failed to highlight the significant benefits of the reforms, such as tax harmonization, reduced corporate tax rates, expanded VAT credits, exemptions for low-income earners and small businesses, and enhanced investment incentives.
In conclusion, the committee asserted that the tax reforms followed extensive consultations and legislative scrutiny, and that any minor clerical issues were being addressed. It encouraged stakeholders to transition from “static critique” to constructive engagement to ensure the effective implementation of the new tax framework.
“We welcome all perspectives that contribute to a shared understanding and successful implementation of the new tax laws. We recognize that some points raised by KPMG are useful, particularly those related to implementation risks and clerical or cross-referencing issues. However, the majority of the publication reflected a misunderstanding of the policy intent, a misrepresentation of deliberate policy choices, and, in many cases, repetitions and presentations of opinions and preferences as facts,” the committee clarified.
“A significant number of the issues described by KPMG as ‘errors,’ ‘gaps,’ or ‘omissions’ are either the firm’s own errors and invalid conclusions; issues not fully understood by the firm; missed context regarding broader reform objectives; areas where KPMG prefers different outcomes than those intentionally chosen in the new tax laws; or obvious clerical and editorial matters that have already been identified internally,” the committee added.
FAQ
What are the main points of the Presidential Fiscal Policy and Tax Reforms Committee's response to KPMG?
The committee's response emphasizes that most of KPMG's claims stem from misunderstandings and that the tax reforms have significant benefits, including tax harmonization and exemptions for low-income earners.
How does the new taxation framework for shares work?
The new chargeable gains framework operates on a graduated scale from zero to a maximum of 30 percent, which will reduce to 25 percent, with about 99 percent of investors enjoying unconditional exemptions.
What is the committee's stance on the taxation of foreign insurance companies?
Eze Chidiebere Paul
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