FG Takes On KPMG Over New Tax Laws, Dismisses Critique as ‘Misreadings’ of Nigeria’s Fiscal Reset

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The Federal Government has mounted a robust defence of Nigeria’s newly enacted tax laws, forcefully rejecting criticisms by global consultancy firm KPMG and describing most of the firm’s observations as misinterpretations, policy disagreements, or analytical errors.

In a detailed rebuttal dated January 10 and published on the State House digital platform, the Presidential Fiscal Policy and Tax Reforms Committee said KPMG’s assessment of the reforms mischaracterised the intent, design, and expected impact of the country’s most comprehensive tax overhaul in decades.

The response comes days after the four cornerstone legislations—the Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service (Establishment) Act, and Joint Revenue Board (Establishment) Act—came into effect on January 1, 2026.

While acknowledging that some of KPMG’s comments on implementation risks, editorial inconsistencies, and cross-referencing issues were useful, the committee stressed that these concerns had already been identified internally and did not undermine the substance of the reforms. It insisted that many of the issues labelled as “gaps” or “errors” were in fact deliberate policy choices or stemmed from incorrect assumptions.

Addressing concerns over capital gains tax on shares, the committee dismissed fears of a looming market sell-off as unfounded. It explained that the tax is progressive, ranging from zero to 30 percent and set to decline to 25 percent over time, with approximately 99 percent of investors enjoying automatic exemptions. For others, reinvestment provisions further limit exposure. According to the committee, Nigeria’s stock market has continued to post record highs, supported by strong foreign inflows, underscoring sustained investor confidence.

On the commencement date of the reforms, the committee faulted KPMG’s call for a rigid January 1, 2026 start date, arguing that the scale of the reforms requires a phased transition across audits, credits, deductions, penalties, and varying assessment periods. A single-date approach, it said, would be impractical for a reform of this magnitude.

The taxation of indirect share transfers was also defended as a conscious, internationally aligned policy choice consistent with Base Erosion and Profit Shifting (BEPS) principles, aimed at closing long-standing loopholes exploited by multinational corporations.

Clarifying issues around Value Added Tax (VAT) and insurance premiums, the committee noted that insurance premiums have long been classified as non-taxable supplies under existing law. It added that exempting foreign insurers, as suggested in some quarters, would distort competition and weaken domestic industry.

The committee further justified the decision to disallow tax deductions for foreign exchange sourced from the parallel market, describing it as deliberate fiscal engineering designed to support naira stability, curb round-tripping, and strengthen official forex channels.

On personal income tax, the government maintained that the new top marginal rate of 25 percent is globally competitive and more equitable than many regional and international peers, particularly when pension contributions are factored into effective tax rates.

The committee accused KPMG of omitting several investor-friendly and pro-growth elements of the reforms from its analysis. These include a possible reduction of the headline corporate income tax rate from 30 to 25 percent, expanded input VAT credits, new exemptions for low-income earners and micro and small enterprises, the removal of minimum tax on turnover and capital, enhanced incentives for priority sectors, and the harmonisation of Nigeria’s tax framework.

According to the committee, the reforms were the product of extensive stakeholder consultations, public hearings, technical reviews, and rigorous legislative scrutiny. It stressed that effective implementation will be supported by forthcoming administrative guidance and regulations, and urged stakeholders to shift from what it described as “static critique” to constructive collaboration.

As Nigeria’s tax reforms begin to take root, the Federal Government signalled it is prepared to defend—and refine—the framework, which it believes will deliver a simpler, fairer, and more competitive tax system capable of driving sustainable economic growth.

With its latest response, the government has drawn a firm line: Nigeria’s fiscal reset is underway, and it is not backing down.