Presidency Counters KPMG, Reaffirms Policy Logic Behind New Tax Laws

The Presidency has pushed back against observations made by KPMG on Nigeria’s newly enacted tax laws, insisting that the reforms reflected deliberate policy choices rooted in economic logic, global best practice, and Nigeria’s long-term development objectives.

In a detailed response issued by the Presidential Fiscal Policy and Tax Reforms Committee, the government acknowledged that some of KPMG’s points relating to implementation risks and clerical or cross-referencing issues were useful.

However, it said the bulk of the firm’s commentary was based on a misunderstanding of policy intent, mischaracterisation of reform choices, and the presentation of professional preferences as factual errors.

The Presidency stated that many of the issues described by KPMG as “errors,” “gaps,” or “omissions” were either incorrect conclusions, a failure to appreciate the broader reform context, or matters already identified internally as editorial issues.

While noting that disagreement with policy direction is legitimate, the committee stressed that such disagreements should not be framed as defects in the law.

It added that other professional firms engaged directly with government during the reform process, allowing for clarification and mutual learning.

On concerns about the taxation of shares and the stock market, the Presidency clarified that the applicable tax on chargeable gains is not a flat 30 per cent, but ranges from zero to a maximum of 30 per cent, which is set to reduce to 25 per cent.

It said the majority of investors qualify for unconditional exemptions or exemptions linked to reinvestment, adding that the claim that the reforms would trigger a market sell-off was unsupported.

Addressing commencement and transition issues, the committee rejected the suggestion that the reforms should begin strictly from the start of an accounting period, arguing that wholesale tax reform affects multiple assessment bases, transaction timelines, audits, credits, and penalties that cannot be neatly confined to a single date.

The Presidency also defended provisions on indirect transfer of shares, describing them as aligned with global best practice and international tax initiatives aimed at closing long-standing loopholes exploited by multinationals. It dismissed claims that the measure could undermine economic stability.

On value-added tax, the response noted that insurance premiums are not taxable supplies under Nigerian tax law, making calls for explicit VAT exemption unnecessary.

It described such suggestions as academic, given the long-standing legal and administrative position.

The committee further explained that the composition of the Joint Revenue Board was intentional, designed to provide a sub-national revenue perspective that complements federal fiscal policy, and consistent with the structure of the former Joint Tax Board.

Other areas addressed included dividend treatment, non-resident tax registration, foreign insurance premiums, parallel market foreign exchange deductions, VAT-linked deductibility, and the introduction of a progressive personal income tax regime.

The Presidency said these provisions were carefully calibrated to promote fairness, support business formalisation, strengthen the naira, and ensure compliance, while remaining competitive by international standards.

The government also faulted KPMG for what it described as false inclusions and factual errors, including references to the Police Trust Fund, which it said expired in June 2025, and issues around small-company tax thresholds that pre-dated the new laws.

According to the Presidency, KPMG’s assessment failed to adequately highlight key structural improvements in the reforms, such as tax harmonisation, planned reduction of corporate tax rates, expanded input VAT credits, exemptions for low-income earners and small businesses, elimination of minimum tax on turnover and capital, and enhanced investment incentives for priority sectors.

The committee said the tax reform followed extensive stakeholder consultations and legislative scrutiny, and that any clerical inconsistencies identified would be addressed through administrative guidance, regulations, and future amendments.

It urged stakeholders to move from what it described as “static critique” to constructive engagement to ensure effective implementation of the new tax laws, which it said represent a bold step toward a self-sustaining and competitive Nigerian economy.