Presidency Defends New Tax Laws
…Faults KPMG Over ‘Misunderstanding’ of Policy Intent
By Patience Ikpeme
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has issued a comprehensive response to recent critiques by professional services firm KPMG regarding Nigeria’s new tax framework, describing many of the firm’s observations as a misunderstanding of the government’s deliberate policy choices.
In a detailed statement, Mr. Oyedele noted that while the committee welcomes perspectives that contribute to a shared understanding of the laws, a significant portion of KPMG’s publication reflects “a mischaracterisation of deliberate policy choices” and the presentation of “opinion and preferences as facts.”
The Committee Chairman clarified that many issues labeled as “errors” or “gaps” by the firm are actually strategic decisions intended to meet broader reform objectives. He pointed out that disagreement with a policy direction does not equate to a legislative mistake.
“KPMG would have been more effective if the firm adopted a similar approach like other professional firms who engaged directly providing the opportunity for clarifications and mutual-learning,” Mr. Oyedele stated, noting that distinguishing between reform objectives and a firm’s personal preference is vital.
Addressing concerns that new tax provisions on gains could trigger a stock market sell-off, the Chairman dismissed the narrative as “unsubstantiated.” He explained that the tax framework is structured from 0% to a maximum of 30%, with plans to reduce the upper limit to 25%.
“The fact is that the applicable tax rate on share gains is not a flat 30%,” he said. “A significant majority of investors (99%) are entitled to unconditional exemption, with others qualifying subject to reinvestment.” He further noted that the market is currently at an all-time high, suggesting that investors recognize the reforms will improve firm profitability and cash flows.
Mr. Oyedele defended the decision to tax the indirect transfer of shares, describing it as a move aligned with global best practices and initiatives to block “a long-exploited tax loophole by multinationals.” He rejected claims that this would hurt competitiveness, calling such assertions “disingenuous.”
On the matter of Value Added Tax (VAT) and insurance premiums, the Chairman argued that specific exemptions are technically unnecessary because insurance premiums do not constitute a “taxable supply” under the Nigeria Tax Act. “If it is not broken, don’t fix it,” he remarked.
The Presidency also took a firm stance on proposals that it believes would undermine local industries. Specifically, the committee rejected suggestions to exempt foreign insurance companies from taxes on Nigerian premiums while local firms remain taxed.
“This would create an unfair and harmful competitive disadvantage for local firms in their own market,” Oyedele said.
Similarly, the law’s refusal to allow tax deductions for foreign exchange bought at a premium in the parallel market was described as a deliberate move to support the Naira.
“By removing the tax subsidy for patronage of the parallel market, the policy aims to reduce incentives for round-tripping and redirect legitimate FX demands to the official market. This is policy congruence, not an error,” the statement read.
Regarding the 25% top marginal tax rate for high earners, which KPMG had questioned, Mr. Oyedele argued the rate remains highly competitive. He compared Nigeria’s rate to South Africa (45%), the UK (45%), and Kenya (35%).
“The rate is not ‘oppressive’ or one that will negatively affect economic growth as claimed, rather it ensures progressivity without compromising competitiveness,” he said. He added that the system is designed to shift the burden away from business formalization by reducing corporate tax rates while adjusting the top rate for high-income individuals.
The Chairman corrected a point regarding the Police Trust Fund, noting that KPMG’s suggestion to repeal its taxing section was “needless” because the fund’s six-year lifespan ended in June 2025. “The provision no longer exists,” he clarified.
In his concluding remarks, Mr. Oyedele urged stakeholders to move away from “static critique” toward a “dynamic engagement model” that supports the implementation of the laws. He acknowledged that while minor clerical or cross-referencing gaps may exist in any massive legislative overhaul, these are being addressed internally.
“The tax reform represents a bold step toward a self-sustaining and competitive Nigeria,” the Chairman concluded.
