The chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, has responded to the alleged errors and others observed in the controversial tax laws of Nigeria, which fully became effective January 1, 2026.
In an analysis posted in a newsletter posted on its website, the Nigerian arm of a global consultancy firm, KPMG, highlighted some sections of the laws that look confusing, making some recommendations.
The company disclosed that if the errors were not addressed, they could discourage investors from the country.
But responding to these observations, Mr Oyedele, who acknowledged that a few points raised by KPMG were useful, particularly where they relate to implementation risks and clerical or cross-referencing issues, stressed that the majority of the publication reflected a misunderstanding of the policy intent, a mischaracterisation of deliberate policy choices, and, in several instances, repetitions and presentation of opinion and preferences as facts.
According to him, a significant proportion of the issues described as “errors,” “gaps,” or “omissions” by KPMG are either the firm’s errors and invalid conclusions or the issues are not properly understood by them.
The tax expert also noted that KPMG may have missed context on broader reforms objectives, or are areas where KPMG prefer different outcomes than the choices deliberately made in the new tax laws.
“While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps. KPMG would have been more effective if the firm adopted a similar approach like other professional firms who engaged directly providing the opportunity for clarifications and mutual-learning.
It is equally important to distinguish between policy choices designed to achieve the reform objectives and proposals that merely represent a firm’s preference,” he added.
Speaking on the taxation of shares and the stock market, the former PwC man said, “Contrary to the presumption that the new tax provisions on chargeable gains would trigger a sell-off on the stock market, the fact is that the applicable tax rate on share gains is not a flat 30 per cent. The tax framework is structured from zero per cent to a maximum of 30 per cent, which is set to reduce to 25 per cent. Furthermore, a significant majority of investors (99 per cent) are entitled to unconditional exemption, with others qualifying subject to reinvestment.
“The market’s performance, which is at an all-time high with increased investment flow, demonstrates investors understanding that the tax changes will enhance the fundamentals of firms both in terms of profitability and cash flows. The sell-off narrative is unsubstantiated as any disposals in December 2025 would have benefited from the re-investment exemption or enhanced deductions under the new law.”
He also clarified that the suggestion to set the commencement date as the start of an accounting period (e.g., 1 January 2026) takes a narrow view of the complex transition issues.
“A wholesale reform affects myriad issues beyond the accounting period, spanning multiple periods, different bases of assessment (preceding year, actual year), as well as issues related to audit, deductions, credits, and penalties. Limiting the commencement to a single date for accounting periods would fail to address the intricacies of continuous transactions and other transition matters. KPMG’s proposal is therefore not a “gold standard” to be applied to all new laws as suggested,” he said.
Below are the other areas he clarified in his post;
Indirect Transfer of Shares
The new provision to tax indirect transfer of shares is a policy choice aligned with global best practices and BEPS initiatives. Its objective is to block a long-exploited tax loophole by multinationals and other investors, not to affect competitiveness. This is a common provision in international tax, and the assertion that it may affect the country’s economic stability is disingenuous.
VAT Exemption on Insurance Premium
KPMG’s point regarding a specific VAT exemption on insurance premium is technically unnecessary, as an insurance premium is not a “taxable supply” defined under the Nigeria Tax Act. Insurance relates to risk transfer, not the supply of goods or services subject to VAT. As this has always been the administrative and legal position, a specific amendment for exemption is academic. If it is not broken, don’t fix it.
Inclusion of ‘Community’ in Definition
The concern about the inclusion of “community” in the definition of a ‘person’ but its omission from the charging section does not constitute a gap or ambiguity. In statutory interpretation, definitions provided in the law apply wherever the defined term appears, unless the context requires otherwise. Hence, ‘person’ and ‘taxable person’ are used in the charging section, and both definitions include ‘community.’ This approach is consistent with modern legislative drafting principles, which use comprehensive definitions to streamline operative provisions and avoid redundancy. This is similar to the inclusion of partnerships and executors in the definition but not under the charging section. The use of the word “includes” further signifies that the list of taxable persons is not exhaustive.
Joint Revenue Board (JRB) Composition
The composition and mandate of the Joint Revenue Board (JRB) are intentional. Its policy advisory role is specifically to provide a subnational tax and revenue perspective that complements the fiscal policy mandate of the Ministry of Finance. Its membership is appropriately limited to revenue-focused agencies, which is why it is called the Joint Revenue Board. This is a similar composition under which the former JTB operated effectively, and its functions remain consistent with the need for inter-agency coordination.
Distinction in Dividend Treatment
KPMG’s analysis appears to mix the distinction between a foreign-controlled company and a foreign operation of a Nigerian company. Dividends distributed by a foreign company cannot be “franked” since no Nigerian Withholding Tax (WHT) would have been deducted. Section 162(1)(s) confers exemption on dividend, interest, rent, or royalty derived from outside Nigeria and brought into Nigeria through approved channels. The choice to treat dividends distributed by Nigerian companies differently from foreign companies is a deliberate policy choice, as they are fundamentally different for tax purposes.
Non-Resident Registration and Final Tax
The view that a payment subject to deduction as final tax should automatically exempt the non-resident recipient from tax registration misses a critical distinction. While the law conditionally exempts passive income from registration, the deduction of tax on non-passive income is not synonymous with an exemption from registration or filing of returns. The same way that residents are required to file returns on income such as interest (in the case of individuals) and dividend where WHT is final. Returns serve a broader purpose beyond solely generating tax revenue.
Tax on Foreign Insurance Premiums
The proposal to exempt foreign insurance companies from tax on premiums from insurance written in Nigeria to deepen penetration, while local insurance companies continue to pay tax, would be detrimental to the domestic insurance sector. This would create an unfair and harmful competitive disadvantage for local firms in their own market. The current policy is designed to protect and promote local industry and ensure a level playing field.
Parallel Market Forex Deduction
The new law disallows tax deduction for the difference where a business buys foreign exchange in the parallel market at a premium over the official rate. This is a critical fiscal policy choice designed to complement monetary policy, strengthen, and stabilise the Naira. By removing the tax subsidy for patronage of the parallel market, the policy aims to reduce incentives for round-tripping and redirect legitimate FX demands to the official market. This is policy congruence, not an error.