Nigeria’s Presidential Fiscal Policy and Tax Reforms Committee has pushed back against criticisms of the country’s new tax laws, arguing that many of the concerns raised by KPMG Nigeria stem from misunderstandings of policy intent rather than genuine legislative gaps or errors.
In a detailed response to KPMG’s report, “Nigeria’s New Tax Laws: Inherent Errors, Inconsistencies, Gaps and Omissions,” the committee acknowledged that some observations relating to implementation risks and clerical cross-referencing issues were valid. However, it maintained that much of the analysis misrepresented deliberate policy choices as technical flaws. According to the committee, differences in policy opinion should not be framed as legislative defects, noting that several professional firms engaged directly with government during the reform process to clarify concerns.
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Addressing fears around capital gains taxation on shares, the committee rejected claims that the new framework could trigger stock market sell-offs, particularly in a high-inflation environment. It clarified that the tax on share gains is progressive, ranging from zero to a maximum of 30 percent, with plans to reduce the top rate to 25 percent. The committee added that about 99 percent of investors qualify for unconditional exemptions, while others can benefit from reinvestment reliefs. It also pointed to the stock market’s record highs and sustained inflows as evidence that investor confidence has not been undermined, arguing that disposals ahead of the new regime would still qualify for exemptions or enhanced deductions.
On indirect transfer taxation, the committee said the provision aligns with global best practices and Base Erosion and Profit Shifting (BEPS) initiatives. It described the rule as a necessary step to close long-standing loopholes in cross-border transactions, rather than a measure aimed at discouraging foreign investment. Claims that the provision could threaten economic stability were described as misleading.
The committee also defended rules limiting deductions for foreign exchange costs incurred outside official markets, describing them as conscious fiscal policy choices designed to complement monetary policy and support naira stability. By removing tax incentives for sourcing FX from the parallel market, the policy seeks to curb round-tripping and channel legitimate demand toward official channels. Similarly, the linkage between expense deductibility and VAT compliance was defended as an anti-avoidance measure intended to discourage patronage of VAT-evading suppliers and improve compliance across the value chain.
On non-resident taxation, the committee rejected the argument that companies whose income is subject to final withholding tax should automatically be exempt from registration and filing requirements. It clarified that while some passive income may be conditionally exempt, withholding tax on non-passive income does not eliminate broader compliance obligations. Filing requirements, it said, serve purposes beyond revenue collection, including transparency and data integrity.
Several issues raised by KPMG were dismissed outright. The committee noted that the Police Trust Fund Act expired in June 2025, making calls for its repeal redundant, and said concerns over small company tax exemptions predate the new laws, having been introduced under the Finance Act 2021. It also clarified that insurance does not constitute a taxable supply under VAT law, making calls for a specific exemption unnecessary.
Beyond responding to criticisms, the committee said KPMG’s analysis overlooked key structural improvements in the new tax regime. These include the proposed reduction in corporate income tax from 30 percent to 25 percent, expanded input VAT credits, exemptions for low-income earners and small businesses, the removal of minimum tax on turnover and capital, and stronger incentives for priority sectors.
The committee emphasised that the reforms followed extensive consultations and public hearings, acknowledging that minor clerical inconsistencies can arise in any major overhaul. It stressed that the success of the new tax laws will depend on effective implementation through regulations, administrative guidance and ongoing stakeholder engagement, urging critics to move from “static critique to dynamic engagement” in supporting the reforms.
