FG Tax Reform Committee has rebutted KPMG and defended controversial New Nigeria Tax Laws as deliberate policy choices.
NaijaOnPoint Nigeria reports that Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee has pushed back strongly against criticisms of the country’s newly introduced tax laws, saying many of the concerns raised by KPMG Nigeria stem from misunderstandings of policy intent rather than genuine flaws in the legislation.
In a detailed response to KPMG’s report titled “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” the committee acknowledged that some observations relating to implementation risks and clerical cross-referencing were valid. However, it insisted that most of the issues flagged were deliberate policy choices wrongly presented as technical errors.
“While it is legitimate to disagree with policy direction, disagreements should not be presented as gaps or omissions,” the committee said, noting that other professional firms had engaged directly with the government during the reform process to resolve concerns.
Capital gains tax and stock market fears
One of the main criticisms by KPMG was that capital gains taxation on shares could trigger sell-offs in the stock market, especially in a high-inflation environment.
The committee dismissed this claim, explaining that the tax on share gains is not a flat 30 per cent, but a progressive rate ranging from 0 to 30 per cent, with plans to reduce the top rate to 25 per cent. It added that about 99 per cent of investors qualify for unconditional exemptions, while others can benefit from reinvestment reliefs.
It also pointed to the Nigerian stock market’s strong performance marked by record highs and steady inflows as evidence that investor confidence has not been undermined by the new tax regime.
Indirect transfers and global standards
Defending the inclusion of indirect transfer taxation, the committee said the provision aligns with global best practices and Base Erosion and Profit Shifting (BEPS) initiatives. It explained that the rule was introduced to close long-standing loopholes in cross-border transactions and was not designed to discourage foreign investment.
Claims that the provision could threaten Nigeria’s economic stability were described as “disingenuous.”
FX rules and VAT compliance
On foreign exchange, the committee defended the rule that disallows tax deductions on the premium paid when FX is sourced outside official markets. It said this was a deliberate fiscal policy meant to complement monetary efforts to stabilise the naira by discouraging parallel market transactions and round-tripping.
Similarly, the provision that links expense deductibility to VAT compliance was described as an anti-avoidance measure aimed at stopping businesses from benefiting from suppliers that evade VAT and encouraging voluntary compliance across the value chain.
Non-resident tax obligations
The committee also rejected claims that non-resident companies whose income is subject to final withholding tax should be exempt from registration and filing. It clarified that while some passive income may be conditionally exempt, withholding tax on non-passive income does not remove broader compliance obligations, which are necessary for transparency and data integrity.
Addressing alleged errors
Some of KPMG’s concerns were dismissed outright. The committee noted that the Police Trust Fund Act expired in June 2025, making calls for its repeal unnecessary. It also said that small company tax exemptions were introduced under the Finance Act 2021, predating the new tax laws.
On VAT and insurance premiums, it explained that insurance does not constitute a taxable supply under Nigerian law, making demands for a specific exemption unnecessary.
What critics overlooked
Beyond rebutting the criticisms, the committee said KPMG failed to highlight key benefits of the new tax regime. These include the potential reduction in corporate income tax from 30 to 25 per cent, expanded input VAT credits, exemptions for low-income earners and small businesses, the removal of minimum tax on turnover and capital, and stronger incentives for priority sectors.
Focus shifts to implementation
The committee stressed that the reforms followed extensive stakeholder consultations and public hearings, noting that minor clerical inconsistencies are inevitable in a major overhaul.
It said the ultimate success of the new tax laws will depend on regulations, administrative guidance and clarifications from tax authorities, urging stakeholders to move from “static critique to dynamic engagement” as Nigeria implements the reforms.