The Presidential Fiscal Policy and Tax Reforms Committee says KPMG misunderstood many parts of Nigeria’s new tax laws.
While some of KPMG’s points on implementation risks were useful, most criticisms were based on wrong assumptions or personal preferences, not actual errors in the law.
General Position of Government:
Many issues described by KPMG as “errors” are:
Misinterpretations of the law
Ignorance of broader reform objectives
Disagreements with deliberate policy choices
Minor clerical issues already identified by government
Policy disagreement should not be presented as legal mistakes.
Clarifications on Key Tax Reforms:
Stock market & share taxation:
Share gains are not taxed at a flat 30%.
Most investors (about 99%) are exempt or qualify for relief through reinvestment.
Stock market performance shows no evidence of panic or sell-off.
Commencement date:
Fixing one start date (like January 1) ignores complex transition issues in a full tax overhaul.
Indirect transfer of shares:
This aligns with global tax best practices and closes loopholes used by multinationals.
VAT on insurance premiums:
Insurance premiums are not taxable supplies, so a special VAT exemption is unnecessary.
Issues Government Says KPMG Misunderstood:
Definition of “community” as a taxable person:
This is legally valid and consistent with modern drafting standards.
Joint Revenue Board (JRB):
Its composition is intentional and focused on revenue coordination, not fiscal policy.
Dividend treatment:
Nigerian and foreign company dividends are treated differently by design, not error.
Non-resident tax registration:
Even when tax is deducted at source, registration and filing may still be required.
Proposals Government Rejected:
Tax exemption for foreign insurance firms:
This would hurt local insurance companies and create unfair competition.
Allowing FX losses from parallel market:
Disallowing these deductions supports Naira stability and discourages black-market FX use.
VAT-linked deductibility:
Businesses cannot deduct costs where VAT was not charged—this promotes fairness and compliance.
Personal income tax rate:
A 25% top rate is competitive globally and still allows reductions through pensions.
Errors Attributed to KPMG:
Police Trust Fund:
It expired in June 2025, so repeal is unnecessary.
Small company exemptions:
These existed before the new tax laws and are not new inconsistencies.
What Government Says KPMG Ignored:
Lower corporate tax rate (30% to 25%)
Tax relief for low-income earners and small businesses
Expanded VAT input credits
Removal of minimum tax on turnover
Better incentives for priority sectors
Conclusion:
The tax reform followed wide consultations and public hearings.
Minor technical issues are already being addressed administratively.
Government urges stakeholders to engage constructively, not just criticise.
The new tax laws are presented as a major step toward a competitive, self-sustaining Nigerian economy.
