Tax committee to KPMG: Your tax law review misunderstood policy intent

The presidential fiscal policy and tax reforms committee has pushed back against KPMG’s critique of the new tax laws.

In a statement on Saturday, the committee said the majority of KPMG’s review reflects “a misunderstanding of the policy intent” and a “mischaracterisation of deliberate policy choices”.KPMG had said in its newsletter that there are “errors, inconsistencies, gaps, omissions, and lacunae” in the new tax laws that require urgent reconsideration to ensure the achievement of their stated objectives.However, the committee said a significant proportion of the issues described as “errors”, “gaps,” or “omissions” by KPMG are either the firm’s own errors and invalid conclusions, or matters not properly understood by the firm.

According to the committee, some of the issues also stem from KPMG missing the broader reform context, preferring alternative outcomes to deliberate policy choices made in the new tax laws, or raising clerical and editorial matters already identified internally.

“We welcome all perspectives that contribute to a shared understanding and successful implementation of the new tax laws,” the committee said.“We acknowledge that a few points raised by KPMG are useful, particularly where they relate to implementation risks and clerical or cross-referencing issues.“However, the majority of the publication reflected a misunderstanding of the policy intent, a mischaracterisation of deliberate policy choices, and, in several instances, repetitions and presentation of opinion and preferences as facts.”

The committee said KPMG should have engaged directly with it, as other firms have done, rather than framing policy disagreements as errors or gaps.

“It is equally important to distinguish between policy choices designed to achieve the reform objectives and proposals that merely represent a firm’s preference,” the committee added.

‘NEW TAX RULES WON’T TRIGGER 30% FLAT TAX ON SHARE GAINS’

The committee said the new tax rules on share gains will not trigger a 30 percent flat tax, contrary to concerns raised by KPMG.

It explained that applicable rates range from 0 percent to 30 percent, and are set to reduce to 25 percent, and that 99 percent of investors are entitled to unconditional exemption.

According to the committee, KPMG’s proposal for a single commencement date oversimplifies complex transition issues and ignores broader implications for multiple accounting periods, assessments, audits, and transactions.

“Limiting the commencement to a single date for accounting periods would fail to address the intricacies of continuous transactions and other transition matters,” the committee said.

“KPMG’s proposal is therefore not a ‘gold standard’ to be applied to all new laws as suggested.”

The committee also said the new tax on indirect share transfers is intended to block exploited loopholes, aligns with global norms, and is not designed to undermine competitiveness, contrary to claims that it could destabilise the economy.

On value-added tax, the committee said KPMG’s call for VAT exemption on insurance premiums is unnecessary, noting that insurance premiums are not “taxable supplies” under Nigeria’s tax law and are already exempt.

‘ISSUES REFLECTING MISUNDERSTANDING BY KPMG’

The committee said the omission of the word “community” from the charging section does not create a gap, as statutory definitions apply throughout the law unless the context requires otherwise.

It added that the composition and role of the Joint Revenue Board (JRB) are deliberate, with a focus on subnational tax perspectives and inter-agency coordination.

According to the committee, KPMG also conflated foreign-controlled companies with Nigerian companies’ foreign operations, noting that tax rules for domestic and foreign dividends are intentionally different.

The committee further clarified that final tax deduction does not amount to exemption from tax registration, as filing returns serves purposes beyond tax payment, including reporting and data integrity.

It said KPMG’s proposals on foreign insurance taxation, foreign exchange deductions, VAT compliance, and personal income tax could undermine key reform objectives, including promoting local industry, stabilising the naira, ensuring fairness, and maintaining competitiveness.

The committee also accused KPMG of incorrectly including issues relating to the Police Trust Fund and small company verification, saying the matters are either outdated or pre-existing.

According to the committee, KPMG failed to recognise key improvements introduced by the new laws, including tax simplification, lower corporate tax rates, and benefits for low-income earners and small businesses.

The tax reforms committee added that a credible review should link identified gaps to policy intent and modern tax realities, noting that the effectiveness of the new laws will now depend on implementation guidance and regulations.

Also, the committee urged stakeholders to engage constructively going forward.

Tax committee to KPMG: Your tax law review misunderstood policy intent