The Federal Government has responded to concerns raised by KPMG over Nigeria’s newly enacted tax laws, insisting that most of the issues flagged by the firm are based on misinterpretation of policy intent rather than actual legal errors.
The response was issued on Saturday via X by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, following a KPMG publication that identified five major “errors” in the tax framework that took effect on January 1, 2026.
FG PUSHES BACK AGAINST KPMG’S CLAIMS
According to the committee, while it welcomes constructive criticism, the majority of KPMG’s observations were described as invalid conclusions, policy disagreements, or misunderstandings of deliberate reform choices.
The committee acknowledged that some concerns — particularly those related to implementation risks and clerical or cross-referencing issues — were useful. However, it stressed that policy differences should not be presented as technical flaws.
“Disagreements over policy direction should not be framed as errors,” the committee stated, adding that direct engagement, as used by other professional firms, would have been more productive.
CLARIFICATION ON SHARE SALES AND CAPITAL GAINS
Addressing fears around taxation of shares, Oyedele clarified that the new chargeable gains framework does not impose a flat 30% tax on share sales.
Instead:
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The tax operates on a graduated scale
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The maximum rate is 30%, set to reduce to 25%
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About 99% of investors will enjoy unconditional exemptions
The committee also pointed to the stock market’s record-high performance as evidence that the reforms have not triggered the sell-off predicted by critics.
START DATE, INDIRECT TRANSFERS, AND VAT ISSUES
On concerns about the commencement date of the laws, the committee rejected arguments that reforms must start strictly at the beginning of an accounting year, citing the complexity of transitioning across tax bases and ongoing transactions.
It also defended provisions taxing indirect transfers of shares, describing them as aligned with global best practices and necessary to close loopholes exploited by multinationals.
Regarding VAT and insurance premiums, the committee explained that insurance premiums are not classified as taxable supplies under Nigerian law, making calls for explicit exemptions unnecessary.
MISUNDERSTANDINGS AND POLICY CHOICES
Several of KPMG’s claims were dismissed as misunderstandings, including issues related to:
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The definition of “community” as a taxable person
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The structure of the Joint Revenue Board
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The treatment of dividends from Nigerian and foreign companies
The committee said these were intentional drafting decisions consistent with international standards.
It also rejected proposals to exempt foreign insurance companies from tax on Nigerian-written premiums, warning that such moves would disadvantage local firms. Similarly, it defended the disallowance of tax deductions on foreign exchange purchased at parallel market rates, linking the policy to efforts to stabilise the naira and curb round-tripping.
PERSONAL INCOME TAX AND FACTUAL ERRORS
On personal income tax, the committee countered claims that the new 25% top marginal rate was oppressive, noting that effective rates could be lower and remain competitive globally.
Oyedele also accused KPMG of factual errors, including references to the Police Trust Fund, which expired in 2025, and misstatements around small company tax exemptions that existed before the new laws.
WHAT FG SAYS KPMG FAILED TO HIGHLIGHT
The committee said the publication overlooked major benefits of the reforms, including:
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Tax harmonization
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Reduced corporate tax rates
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Expanded VAT credits
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Exemptions for low-income earners and small businesses
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Improved investment incentives
It emphasised that the reforms followed extensive consultations and legislative scrutiny, adding that minor clerical issues are already being addressed.
“We welcome all perspectives that contribute to successful implementation,” Oyedele said, urging stakeholders to move from static critique to constructive engagement.
Since the introduction of the tax reform laws, the administration of President Bola Tinubu has faced intense criticism. Opposition figures, including Atiku Abubakar and Peter Obi, have accused the government of overburdening Nigerians amid rising economic pressures — making the tax reforms one of the most debated policy shifts of the current administration.
