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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.
KPMG had noted potential errors, gaps, and inconsistencies in the laws, raising issues around the taxation of shares, dividend treatment, non-resident obligations, and foreign exchange deductions, and warning that these could affect businesses and taxpayers.
In a statement on Saturday, January 10, Oyedele said that while some points raised by the tax firm were useful, the majority of KPMG’s report mischaracterised the objectives and structure of the new tax framework.
He explained that most issues flagged as “errors,” “gaps,” or “omissions” were either incorrect conclusions, matters taken out of context, or areas where the firm preferred outcomes different from those deliberately adopted.
According to Oyedele, KPMG’s analysis reflected misunderstandings of policy objectives or disagreements with deliberate reform choices.
He noted that while it is legitimate to disagree with policy direction, such disagreements should not be framed as errors or omissions.
The committee provided detailed clarifications on several key points raised by KPMG.
Regarding the taxation of shares, it noted that the framework ranges from 0% to a maximum of 30%, with the rate set to reduce to 25%, and that 99% of investors are eligible for unconditional exemption.
Oyedele dismissed fears of a market sell-off, explaining that disposals in December 2025 would have benefited from reinvestment exemptions or enhanced deductions under the new law.
On the commencement date of the laws, he said, aligning strictly with accounting periods represented a narrow view of the complex transition issues involved in comprehensive tax reform.
Regarding the definition of “community,” the committee said the statutory definition applies throughout the law unless the context requires otherwise, noting that the word “includes” makes the list of taxable persons non-exhaustive.
On dividend taxation, Oyedele explained that dividends from foreign companies could not be franked, noting that treating dividends from Nigerian and foreign companies differently was a deliberate policy decision based on tax principles.
He also clarified that non-residents are not automatically exempt from tax registration even if income is subject to final withholding tax, as returns serve broader compliance purposes.
The statement further described provisions on indirect transfer of shares as deliberate policy measures aligned with global best practices and BEPS initiatives, aimed at closing loopholes exploited by multinationals.
Insurance premiums were confirmed not subject to Value Added Tax, as insurance does not constitute a taxable supply under Nigerian law. Issues related to small company exemptions were noted to predate the new laws under the Finance Act 2021.
Minor clerical inconsistencies and cross-referencing gaps were acknowledged, with Oyedele saying they are being addressed through administrative guidance and regulations.
Other clarifications included disallowing deductions for foreign exchange transactions at parallel market rates, linking tax deductibility to VAT compliance as an anti-avoidance measure, and noting that calls to repeal the Police Trust Fund were unnecessary, as it had expired in June 2025.
Oyedele stated that the reforms represent a bold step toward a self-sustaining and competitive Nigeria, urging stakeholders to move from “static critique to dynamic engagement” to ensure effective implementation.
