Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has faulted a recent report by KPMG on Nigeria’s new tax laws, describing it as largely rooted in a misunderstanding of policy intent and a mischaracterisation of deliberate policy choices.

KPMG Nigeria, a professional audit and tax advisory firm, in a report published during the week, identified what it termed “errors, inconsistencies, gaps and omissions” in the new tax laws, warning that they could undermine the objectives of the reforms.

According to the firm, existing capital gains tax provisions impose tax on nominal gains without adjusting for inflation, which it said could result in unfair taxation in Nigeria’s high-inflation environment. It recommended the introduction of cost indexation allowances to adjust asset values for inflation.

On indirect transfers, KPMG noted that Section 47 of the new law imposes tax on gains arising from indirect transfers by non-residents, warning that unclear thresholds could discourage foreign investment. T

he firm recommended clearer guidance on scope, thresholds and reporting requirements.

KPMG also flagged other areas it said required review, including foreign exchange deduction limits, VAT expense disallowances and ambiguity in non-resident taxation, among others. It warned that failure to amend the laws could expose businesses to higher costs, dampen investor confidence and fuel market volatility.

Responding via his X handle, Oyedele acknowledged that some of KPMG’s observations were useful, particularly those relating to implementation risks and clerical or cross-referencing issues.

However, he said a significant portion of the issues described by the firm as “errors,” “gaps,” or “omissions” were either KPMG’s own analytical errors, conclusions based on misinterpretation, missed context on broader reform objectives, or areas where the firm simply preferred alternative outcomes to those deliberately adopted in the law.

He stressed that policy disagreement should not be framed as legislative error.

“KPMG would have been more effective if the firm adopted a similar approach like other professional firms that engaged directly, providing the opportunity for clarifications and mutual-learning,” Oyedele said.

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

Addressing concerns over capital gains taxation, Oyedele dismissed claims that the new tax provisions could trigger a sell-off in the stock market, explaining that the applicable tax rate on share gains is not a flat 30 per cent.

“The tax framework is structured from 0% to a maximum of 30 per cent, which is set to reduce to 25 per cent,” he said. “Furthermore, a significant majority of investors (99 per cent) are entitled to unconditional exemption, with others qualifying subject to reinvestment.”

He added that the current market performance, which is at an all-time high with increased investment inflows, shows that investors understand that the reforms will strengthen company fundamentals in terms of profitability and cash flow.

“The sell-off narrative is unsubstantiated as any disposals in December 2025 would have benefited from the re-investment exemption or enhanced deductions under the new law.”

On concerns over the inclusion of “community” in the definition of a “person” but its omission from the charging section, Oyedele said this did not amount to a gap or ambiguity.

“In statutory interpretation, definitions provided in the law apply wherever the defined term appears, unless the context requires otherwise. Hence, ‘person’ and ‘taxable person’ are used in the charging section, and both definitions include ‘community,’” he said.

“This approach is consistent with modern legislative drafting principles, which use comprehensive definitions to streamline operative provisions and avoid redundancy.”

Oyedele also rejected KPMG’s proposal to exempt foreign insurance companies from tax on premiums earned in Nigeria while local insurers remain taxable, warning that such a move would undermine domestic firms.

“This would create an unfair and harmful competitive disadvantage for local firms in their own market. The current policy is designed to protect and promote local industry and ensure a level playing field,” he said.

On foreign exchange deductions, Oyedele explained that the new law disallows tax deductions for the difference where businesses source FX from the parallel market at a premium to the official rate.

“This is a critical fiscal policy choice designed to complement monetary policy, strengthen, and stabilise 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.”

He further noted that while critiquing the reforms, KPMG failed to sufficiently highlight key structural improvements in the new laws, including simplification and harmonisation of taxes, reduction of corporate income tax from 30 per cent to 25 per cent, expanded input VAT credits, tax exemptions for low-income earners and small businesses, elimination of minimum tax on turnover and capital, and improved incentives for priority sectors.

“A balanced assessment would have recognised these transformative elements, among others,” Oyedele said.

He stated that the tax reforms were the outcome of extensive consultations with stakeholders and a transparent legislative process that included public hearings, noting that international firms had ample opportunity to provide technical input.

“We urge all stakeholders to pivot from a static critique to a dynamic engagement model, which allows for clarifications and a productive partnership in the implementation of the new tax laws.”