Ayobamiji Komolafe 
The Presidential Fiscal Policy and Tax Reforms Committee has rejected significant aspects of a recent analysis by KPMG on Nigeria’s new tax laws, stating that the report largely reflects a misunderstanding of policy intent, mischaracterisation of deliberate reform choices, and the presentation of opinions as facts.
In a statement titled “Response to KPMG: Observations on Nigeria’s New Tax Laws,” the Committee acknowledged that some implementation risks and clerical or cross-referencing issues identified by KPMG are valid.
However, it maintained that most of the issues described as errors, gaps, or omissions stem from incorrect conclusions, lack of contextual understanding of the broader reform objectives, or preferences for alternative policy outcomes rather than actual defects in the law.
The Committee emphasised that disagreement with policy direction should not be framed as legislative error.
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It noted that other professional firms engaged constructively with government through direct consultations, which allowed for clarifications and mutual learning, rather than public mischaracterisation of deliberate policy decisions.
On the taxation of shares and stock market transactions, the Committee clarified that the new capital gains framework does not impose a flat 30 per cent tax as suggested. Instead, it operates on a graduated scale ranging from zero to a maximum of 30 per cent, which is scheduled to reduce to 25 per cent.
It added that about 99 per cent of investors qualify for unconditional exemptions, while others may benefit through reinvestment provisions.
According to the Committee, the strong performance of the stock market and increased investment inflows demonstrate that investors understand the reforms will strengthen corporate profitability and cash flows.
Addressing concerns over the commencement date of the new laws, the Committee rejected proposals to tie implementation strictly to accounting periods such as January 1, 2026.
It explained that the scale of the reforms affects multiple assessment bases, audit cycles, deductions, credits, and penalties across different periods, making a single accounting start date insufficient to address complex transition issues.
The Committee also defended the provision taxing indirect transfers of shares, describing it as a globally accepted measure aligned with international best practices and the OECD’s Base Erosion and Profit Shifting framework.
It stated that the provision is designed to close long-standing loopholes exploited by multinational companies and does not threaten Nigeria’s competitiveness or economic stability.
On VAT treatment of insurance premiums, the Committee said insurance does not constitute a taxable supply under Nigerian tax law, as it involves risk transfer rather than the supply of goods or services.
It therefore described calls for a specific VAT exemption as unnecessary, noting that the legal and administrative position has always been clear.
Responding to what it described as misinterpretations by KPMG, the Committee explained that the inclusion of “community” in the definition of a taxable person does not create ambiguity, as statutory definitions apply wherever the defined term appears unless context dictates otherwise.
It added that the composition and mandate of the Joint Revenue Board were deliberately structured to provide subnational revenue perspectives and remain consistent with the effective framework under the former Joint Tax Board.
The Committee further clarified distinctions in dividend treatment, stressing that dividends paid by foreign companies cannot be franked because no Nigerian withholding tax would have been deducted.
It noted that the exemption for foreign-sourced income brought into Nigeria through approved channels is a deliberate policy choice that reflects fundamental differences in the tax treatment of Nigerian and foreign companies.
On non-resident taxation, the Committee rejected the view that the deduction of tax at source automatically eliminates the need for registration or filing of returns.
It explained that tax filing serves broader purposes beyond revenue collection and applies to both resident and non-resident taxpayers depending on the nature of income earned.
The Committee warned that some proposals advanced by KPMG would undermine key reform objectives.
It argued that exempting foreign insurance companies from tax on premiums earned in Nigeria while local firms remain taxable would distort competition and weaken the domestic insurance industry.
It also defended the decision to disallow tax deductions for foreign exchange purchased in the parallel market at rates above the official window, describing the measure as a deliberate fiscal policy tool designed to support monetary policy and stabilise the Naira.
Defending the progressive personal income tax structure, the Committee said the top marginal rate of 25 per cent for high earners is internationally competitive and consistent with the reform objective of fairness.
It noted that effective tax rates can be significantly lower through pension contributions and compared Nigeria’s rates favourably with those of several African and developed economies.
The Committee also identified factual errors in KPMG’s report, including references to the Police Trust Fund, which expired in June 2025, and concerns about small company tax thresholds that predate the new tax laws, having been introduced under the Finance Act 2021.
According to the Committee, KPMG failed to sufficiently acknowledge major structural improvements introduced by the reforms, including tax simplification and harmonisation, reduction in corporate income tax, expanded VAT input 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 further said the tax reforms were the product of extensive stakeholder engagement and public hearings, and that any clerical inconsistencies are already being addressed through administrative guidance and regulations.
It urged stakeholders to move beyond static critique and embrace constructive engagement to ensure effective implementation of the new tax framework, describing the reforms as a bold step toward a self-sustaining and globally competitive Nigerian economy.
