The Federal Government has rejected claims by global professional services firm KPMG that Nigeria’s newly enacted tax laws contain significant errors and gaps, insisting that most of the issues raised reflect policy disagreements rather than legislative flaws.
In a detailed response released by the Presidential Fiscal Policy and Tax Reforms Committee and shared on Saturday by presidential spokesman Bayo Onanuga, the government said KPMG misunderstood the intent behind several provisions and misrepresented deliberate reform choices as technical defects.
While acknowledging that a few observations—particularly around implementation risks and minor clerical or cross-referencing issues—were valid, the committee maintained that the bulk of KPMG’s critique was based on incorrect assumptions and professional preferences.
“The majority of the publication reflected a misunderstanding of the policy intent, a mischaracterisation of deliberate policy choices and, in several instances, the repetition of opinions as facts,” the committee said.
It added that many of the so-called “errors” cited by KPMG were either taken out of context, based on incorrect conclusions, or reflected alternative outcomes preferred by the firm rather than those intentionally adopted by the government.
Defence of core provisions
Responding to concerns that new capital gains tax provisions could unsettle the stock market, the government said the fears were unfounded, noting that the tax is progressive, capped at 30 per cent and set to reduce to 25 per cent.
According to the committee, about 99 per cent of investors qualify for unconditional exemptions, while others enjoy exemptions subject to reinvestment. It added that recent record performances on the stock market contradicted claims of a potential sell-off.
On the commencement date of the new laws, the committee rejected KPMG’s recommendation to align implementation strictly with accounting periods, saying such an approach ignored complex transition issues involving multiple tax bases, audits, deductions and credits.
The government also defended provisions taxing indirect share transfers, describing them as consistent with global best practices and OECD anti–base erosion standards aimed at closing loopholes exploited by multinational corporations.
Similarly, it dismissed concerns over VAT on insurance premiums, stressing that insurance is not a taxable supply under Nigerian law and therefore requires no specific exemption.
‘Misinterpretations’ addressed
The committee rejected KPMG’s claim that including “community” in the definition of a ‘person’ without repeating it in the charging section created ambiguity, noting that statutory definitions apply throughout a law unless expressly excluded.
It also defended the composition of the Joint Revenue Board, explaining that its revenue-focused structure was intentional and aligned with its advisory role.
On dividend taxation, the government said KPMG conflated foreign-controlled companies with Nigerian companies operating abroad, stressing that dividends from foreign companies cannot be franked because no Nigerian withholding tax applies.
The committee further disagreed with calls for automatic tax registration exemptions for non-resident companies subject to final withholding tax, arguing that filing obligations support monitoring and compliance.
Proposals rejected
The government said several KPMG recommendations would undermine the objectives of the reforms, including proposals to exempt foreign insurance companies from tax on Nigerian-sourced premiums, which it said would disadvantage local firms.
It also defended the decision to disallow tax deductions for foreign exchange purchased at parallel market rates, describing it as a deliberate fiscal choice to support monetary policy, discourage arbitrage and stabilise the naira.
On VAT-linked deductibility, the committee said denying deductions where VAT has not been charged was an anti-avoidance measure aimed at fairness and improved compliance.
Addressing personal income tax, it rejected claims that the new top marginal rate of 25 per cent was excessive, noting that effective rates could be lower and remained competitive compared with peer economies such as Ghana, Kenya, South Africa, the UK and the US.
KPMG’s position
In a January 9 report, KPMG had warned that the New Tax Act and the Nigeria Tax Administration Act contained errors, inconsistencies and gaps requiring urgent review to ensure clarity and sustainable growth.
The Federal Government, however, said the reforms followed extensive consultations and public hearings, adding that any clerical inconsistencies would be resolved through administrative guidance and regulations.
The committee urged stakeholders to move beyond what it described as “static critique” and engage constructively to support effective implementation of the new tax regime.
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