FG insists reforms are deliberate, globally aligned, and misunderstood by critics
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has pushed back against criticisms of Nigeria’s newly gazetted tax laws, saying many of the issues raised by KPMG Nigeria stem from a misunderstanding of government policy objectives rather than genuine flaws in the legislation.
In a statement released on Saturday, Oyedele said the Federal Government remains open to stakeholder input but stressed that most of KPMG’s observations misrepresented the intent and design of the reforms.
According to him, while some aspects of the report were helpful, particularly those highlighting implementation risks and minor clerical or cross-referencing issues, the bulk of the commentary framed policy disagreements as legislative errors.
“We welcome all perspectives that support a shared understanding and effective implementation of the new tax laws,” Oyedele said. “However, the majority of the publication reflected a misunderstanding of the policy intent, a mischaracterisation of deliberate policy choices, and, in several instances, opinions presented as facts.”
He added that several matters described by KPMG as “errors,” “gaps,” or “omissions” were either taken out of context or represented areas where the firm preferred alternative policy outcomes.
“Disagreeing with a policy direction is legitimate,” the statement noted, “but such disagreements should not be presented as defects in the law.”
Stock Market, Shares and Investor Concerns
Responding to concerns over the taxation of shares and capital market transactions, Oyedele explained that the new framework applies tax rates ranging from 0 per cent to a maximum of 30 per cent, which is scheduled to reduce to 25 per cent. He noted that about 99 per cent of investors qualify for unconditional exemptions, dismissing fears of a potential sell-off in the stock market.
The committee further clarified that disposals made in December 2025 would still benefit from reinvestment exemptions or enhanced deductions provided under the new regime.
Commencement Date and Transition Issues
On the issue of the laws’ commencement date, Oyedele said critics who insist on strict alignment with accounting periods fail to appreciate the complexity of transitioning to a comprehensive tax overhaul. He explained that such reforms inevitably span multiple tax years, audits, deductions, credits, and penalties.
Indirect Share Transfers and Global Standards
Addressing objections to the taxation of indirect share transfers, the committee described the provision as a deliberate anti-avoidance measure, aligned with international best practices and the OECD’s Base Erosion and Profit Shifting (BEPS) framework. The aim, it said, is to close loopholes historically exploited by multinational companies.
VAT, Insurance, and Definitions
The statement also clarified that insurance premiums are not subject to Value Added Tax, noting that insurance does not constitute a taxable supply under the Nigeria Tax Act, making a specific exemption unnecessary.
On the definition of “community,” the committee explained that the statutory meaning applies throughout the law unless otherwise stated, adding that the use of the word “includes” makes the list of taxable persons intentionally non-exhaustive.
Dividends, Non-Residents and Compliance
Oyedele further explained that dividends from foreign companies cannot be franked because no Nigerian withholding tax is deducted at source. He said the decision to treat dividends from Nigerian companies differently from those of foreign firms is a conscious policy choice, reflecting their different tax characteristics.
He also clarified that non-residents are not automatically exempt from tax registration, even where their income is subject to final withholding tax, as tax returns serve broader compliance and reporting purposes.
FX Transactions, VAT Compliance and Other Issues
Other points addressed included the disallowance of deductions based on parallel market exchange rates, described as a fiscal policy tool designed to complement monetary policy. The committee also defended the linkage of tax deductibility to VAT compliance as an anti-avoidance measure.
On the Police Trust Fund, Oyedele noted that the fund expired in June 2025, making calls for its repeal unnecessary. Issues raised around small company exemptions, he said, predated the new tax laws and originated under the Finance Act 2021.
Minor Errors to Be Fixed
The committee acknowledged the existence of minor clerical inconsistencies and cross-referencing gaps, confirming that these are already being reviewed internally and will be resolved through administrative guidance and regulations.
Describing the reforms as a major step toward economic sustainability, the committee said the tax overhaul is designed to enhance fairness, competitiveness, and revenue generation.
“The tax reform represents a bold step toward a self-sustaining and competitive Nigeria,” the statement said, urging stakeholders to move from “static critique to dynamic engagement” to ensure successful implementation.
The response follows a report by KPMG Nigeria, which warned that perceived errors, gaps, and inconsistencies in the newly gazetted tax laws could have implications for businesses and taxpayers. The government, however, maintains that the reforms are intentional, well-considered, and aligned with Nigeria’s long-term fiscal goals.
About the Author
