The Presidential Fiscal Policy and Tax Reforms Committee has faulted a recent analysis of Nigeria’s newly enacted tax laws by global professional services firm KPMG, saying the firm “got it all wrong” on several key provisions.
Naijaonpoint reports that KPMG had alleged multiple errors and gaps in the new laws and urged the Federal Government to urgently review the legislation.
Among the issues raised by the firm was Section 6(2) of the Nigeria Tax Act (NTA), which it claimed could result in double taxation for foreign companies. KPMG argued that the provision, which treats undistributed foreign profits as “construed as distributed” while also requiring them to be included in the profits of a Nigerian company, could attract income tax at 30 per cent.
The firm also called for amendments to Section 6(1) of the Nigeria Tax Administration Act (NTAA), 2025, to exempt non-resident companies whose income is subject to final withholding tax from tax registration, noting that Section 11(3) of the same Act already exempts such companies from filing tax returns.
Responding on Saturday, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said much of KPMG’s commentary was based on misunderstandings of policy intent, mischaracterisation of deliberate reforms, and the presentation of opinions as facts.
Oyedele acknowledged that some concerns raised by the firm were useful, particularly those relating to implementation risks and clerical or cross-referencing matters. However, he said the bulk of the analysis failed to situate the reforms within their broader fiscal and economic objectives.
According to him, several matters described as “errors”, “gaps” or “omissions” were rooted in incorrect conclusions, incomplete understanding of the reforms, missed policy context, or preferences for alternative outcomes rather than actual flaws in the law.
He stressed that disagreement with policy direction should not be framed as technical error, noting that other professional firms had adopted a more constructive approach by engaging policymakers directly for clarification.
Addressing fears that new chargeable gains provisions could trigger a sell-off in the stock market, Oyedele said such claims were not supported by evidence.
He explained that the tax rate on gains from shares ranges from zero to a maximum of 30 per cent, which is expected to reduce to 25 per cent, and is not a flat rate.
Oyedele added that about 99 per cent of investors qualify for unconditional exemption, while others are eligible for exemption subject to reinvestment.
“The stock market is currently at an all-time high with increased investment flows, showing that investors understand that the reforms strengthen company fundamentals, profitability and cash flows,” he said.
On the commencement date of the new laws, Oyedele said proposals to align implementation strictly with accounting periods failed to appreciate the complexity of a wholesale tax reform.
He noted that the reforms affect multiple assessment bases, audit timelines, deductions, credits and penalties, making it impractical to tie commencement to a single accounting date without unresolved transition issues.
He also defended provisions on indirect transfer of shares, describing them as consistent with global best practices aimed at curbing base erosion and profit shifting.
According to him, the objective was to close a long-standing loophole exploited by multinational companies, not to undermine competitiveness.
Oyedele dismissed calls for explicit VAT exemption on insurance premiums, saying insurance does not constitute a taxable supply under Nigerian tax law.
“Insurance is about risk transfer, not the supply of goods or services subject to VAT. This has always been the legal and administrative position,” he said.
On dividend taxation, he said KPMG appeared to have conflated foreign-controlled companies with foreign operations of Nigerian companies.
He explained that dividends from foreign companies cannot be franked because no Nigerian withholding tax would have been deducted, adding that the distinction between dividends from Nigerian and foreign companies was deliberate and logical.
On non-resident taxation, Oyedele said the assumption that final withholding tax automatically removes registration or filing obligations ignored the broader purpose of tax administration.
He said tax returns serve compliance and information purposes beyond revenue collection and apply to both residents and non-residents.
He also rejected suggestions to exempt foreign insurance companies from tax on premiums written in Nigeria, warning that such a move would disadvantage local insurers.
Oyedele defended the disallowance of deductions for foreign exchange sourced from the parallel market at rates above the official window, describing it as a fiscal measure aligned with monetary policy to discourage round-tripping and support naira stability.
He also explained that linking deductibility of expenses to VAT compliance was an anti-avoidance measure aimed at eliminating unfair advantages enjoyed by businesses patronising VAT-evading suppliers.
On personal income tax, he said criticism of the 25 per cent top marginal rate ignored reliefs such as pension contributions, noting that effective rates could be significantly lower.
He added that the rate compares favourably with those in other African countries and advanced economies and was designed to promote fairness while easing the burden of business formalisation.
Oyedele said KPMG’s publication failed to acknowledge major structural improvements introduced by the reforms, including tax simplification, planned reduction of corporate tax to 25 per cent, expanded VAT credits, exemptions for low-income earners and small businesses, removal of minimum tax on turnover and capital, and enhanced investment incentives.
He added that while clerical inconsistencies could occur in any major overhaul, such issues were already being addressed internally.
“The success of the new tax laws now depends largely on administrative guidance, clarifications from the tax authority and supporting regulations, pending future amendments,” Oyedele said, urging stakeholders to adopt a more collaborative approach to implementation.