AWC Economy Desk
The Presidential Fiscal Policy and Tax Reforms Committee has issued a firm response to a recent KPMG publication on Nigeria’s new tax laws, faulting the report for what it described as widespread misinterpretation of policy intent, selective analysis, and the presentation of professional preferences as factual errors.
In a statement released on January 10, 2026, the Committee said while it welcomed constructive engagement and acknowledged that KPMG raised some useful points—particularly on implementation risks and clerical cross-referencing issues—the bulk of the firm’s observations reflected misunderstandings of deliberate policy choices embedded in the sweeping tax reforms.
According to the Committee, many issues labelled by KPMG as “errors” or “gaps” were either invalid conclusions, misreadings of broader reform objectives, or matters already identified internally as minor editorial corrections. It stressed that disagreement with policy direction should not be conflated with legislative defects, noting that other professional firms had adopted more effective engagement models through direct dialogue.
Clarifying key reform areas, the Committee dismissed concerns that the taxation of share gains would trigger stock market sell-offs, explaining that the framework is progressive—ranging from 0 to 30 percent and set to reduce to 25 percent—with up to 99 percent of investors enjoying unconditional exemptions. It pointed to record market performance as evidence that investors understand the reforms will strengthen corporate fundamentals.
On transition timelines, the Committee rejected proposals to tie commencement dates strictly to accounting periods, arguing that wholesale reforms affect multiple tax bases, audit cycles, and continuous transactions that cannot be resolved by a single calendar date. Similarly, it defended the taxation of indirect share transfers as a global best practice aligned with BEPS standards, designed to close long-standing loopholes rather than weaken competitiveness.
The Committee also addressed sector-specific issues, clarifying that insurance premiums are not taxable supplies under VAT law, that the inclusion of “community” in tax definitions follows modern drafting principles, and that the Joint Revenue Board’s composition is intentionally revenue-focused to complement fiscal policy coordination.
Several KPMG proposals were described as potentially harmful, including suggestions to exempt foreign insurance firms from tax while local operators remain liable, a move the Committee warned would undermine domestic industry. It also defended measures disallowing tax deductions for parallel market foreign exchange premiums and linking VAT compliance to deductibility, describing both as critical tools for stabilising the naira and promoting fairness.
On personal income tax, the Committee countered claims of excessive burden, noting that a top marginal rate of 25 percent—effectively as low as 22 percent with pension contributions—remains competitive internationally while ensuring progressivity and easing the tax load on businesses through lower corporate rates.
The response further corrected what it called factual errors, including references to the Police Trust Fund, which expired in June 2025, and assertions about small company exemptions that predate the new laws.
Concluding, the Committee said the reforms—developed through extensive consultations and public hearings—represent a bold step toward a simplified, harmonised, and growth-oriented tax system. It urged stakeholders to move beyond static criticism toward active engagement, stressing that effective implementation will rely on administrative guidance, regulatory clarity, and continued partnership as Nigeria advances toward fiscal sustainability and global competitiveness.
