The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has clarified the policy intent behind Nigeria’s newly gazetted tax laws following concerns raised by KPMG Nigeria.
The clarification comes in response to a KPMG report that flagged what it described as errors, gaps and inconsistencies in the new tax framework, including issues around the taxation of shares, dividend treatment, non-resident obligations and foreign exchange deductions, which the firm warned could affect businesses and taxpayers.
In a statement issued on Saturday, Oyedele said that while some of KPMG’s observations were helpful, the bulk of the report reflected a misunderstanding of the policy objectives or disagreement with deliberate reform choices.
“We welcome all perspectives that contribute to a shared understanding and the successful implementation of the new tax laws,” the statement said, adding that “a few points raised by KPMG are useful, particularly where they relate to implementation risks and clerical or cross-referencing issues.”
However, the committee stressed that most of the issues characterised as “errors,” “gaps,” or “omissions” were either incorrect conclusions, taken out of context, or simply areas where KPMG preferred alternative outcomes to those intentionally adopted by policymakers.
“While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps,” the statement said.
Oyedele provided detailed clarifications on several key provisions highlighted in the report. On the taxation of shares and the stock market, he explained that the framework is structured with rates ranging from 0 per cent to a maximum of 30 per cent, which will be reduced to 25 per cent, while noting that 99 per cent of investors qualify for unconditional exemptions.
He dismissed fears of a market sell-off, stating that disposals made in December 2025 would have benefited from reinvestment exemptions or enhanced deductions under the new law.
On the commencement date of the legislation, Oyedele said a rigid alignment with accounting periods would take a narrow view of the complex transition issues involved in a comprehensive tax reform spanning multiple periods, audits, deductions, credits and penalties.
Addressing concerns over the definition of “community,” the committee explained that the statutory definition applies throughout the law unless the context requires otherwise, and that the use of the word “includes” makes the list of taxable persons non-exhaustive.
On dividend taxation, the statement clarified that dividends from foreign companies cannot be franked because no Nigerian withholding tax would have been deducted. It added that treating dividends from Nigerian companies differently from those of foreign firms was a deliberate policy choice, reflecting fundamental tax differences.
The committee also explained that non-residents are not automatically exempt from tax registration even where income is subject to final withholding tax, as tax returns serve broader compliance and information-gathering purposes.
Regarding indirect transfers of shares, the provision was described as a deliberate policy choice aligned with global best practices and Base Erosion and Profit Shifting (BEPS) initiatives, aimed at closing loopholes long exploited by multinational companies.
On insurance, the statement clarified that premiums are not subject to Value Added Tax, as insurance does not constitute a taxable supply under the Nigeria Tax Act, making calls for a specific exemption unnecessary.
Issues raised concerning small-company exemptions were noted to predate the new laws and had already been addressed under the Finance Act 2021.
The committee acknowledged the existence of minor clerical inconsistencies and cross-referencing gaps, noting that these were already being identified internally and would be resolved through administrative guidance and regulations.
Describing the reforms as “a bold step toward a self-sustaining and competitive Nigeria,” the committee urged stakeholders to move from “static critique to dynamic engagement” to ensure effective implementation.
Additional clarifications covered the disallowance of deductions on foreign exchange transactions conducted at parallel market rates, described as a fiscal tool to complement monetary policy; the linkage of tax deductibility to VAT compliance as an anti-avoidance measure; and the Police Trust Fund, which expired in June 2025, rendering calls for its repeal unnecessary.
