Oyedele Shrugs off KPMG’s Criticisms, Defends New Tax Laws

Festus Akanbi

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has defended the Nigeria Tax Act (NTA) and clarified the policy intent, stating that KPMG Nigeria does not understand the reform.

Oyedele made the points in a statement posted on X yesterday, following KPMG’s analysis of the NTA, which identified perceived weaknesses.

In a report, KPMG Nigeria had flagged potential errors, gaps, and inconsistencies in the newly gazetted tax laws, including concerns about the taxation of shares, dividend treatment, non-resident obligations, and foreign exchange deductions, and warned that these could affect businesses and taxpayers.

KPMG called for a review of the tax laws, noting that the errors, inconsistencies, gaps, omissions, and lacunae urgently required reconsideration to ensure the stated objectives were met.

In his reaction, Oyedele said the report largely reflected analytical errors, a failure to grasp the reforms properly, missed policy context, disagreement with deliberate policy choices, and minor clerical issues that had already been identified internally.

The rebuttal comes amid an intense debate within Nigeria’s business and professional community over the implications of the new tax framework, which is among the most ambitious fiscal reforms in recent years.

While acknowledging that some of KPMG’s observations were useful, particularly those touching on implementation risks and clerical or cross-referencing matters, Oyedele stressed that the bulk of the report mischaracterised the objectives and structure of the reforms.

“While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps,” he said, adding that KPMG would have been more effective had it engaged directly with policymakers, as other professional firms did, to allow for clarification and mutual learning.

The Chairman provided detailed clarifications on key provisions flagged by KPMG.

On taxation of shares and the stock market, Oyedele said the framework is “structured from 0% to a maximum of 30%, which is set to reduce to 25%,” with “99% of investors entitled to unconditional exemption.”

He dismissed fears of a market sell-off, noting that “any disposals in December 2025 would have benefited from the reinvestment exemption or enhanced deductions under the new law.”

On the commencement date of the laws, Oyedele said that aligning strictly with accounting periods “takes a narrow view of the complex transition issues” involved in a wholesale tax reform that spans multiple periods, audits, deductions, credits, and penalties.

On the issue of indirect transfer of shares, Oyedele described the provision as a deliberate policy choice aligned with global best practices and BEPS initiatives, aimed at closing long-exploited loopholes by multinationals.

He also clarified that insurance premiums are not subject to Value Added Tax (VAT), noting that insurance does not constitute a taxable supply under the Nigeria Tax Act, making calls for a specific exemption unnecessary.

Addressing the definition of ‘community’, he said the statutory definition applies throughout the law unless the context requires otherwise, noting that the word “includes” in the law makes the list of taxable persons non-exhaustive.

On dividend taxation, Oyedele stated that dividends from foreign companies could not be franked because no Nigerian withholding tax would have been deducted, adding that “the choice to treat dividends distributed by Nigerian companies differently from foreign companies is a deliberate policy choice, as they are fundamentally different for tax purposes.”

It also explained that non-residents were not automatically exempt from tax registration, even if their income is subject to final withholding tax, because returns serve broader compliance purposes.

He also clarified that disallowing deductions on foreign exchange transactions at parallel market rates is a fiscal policy tool to complement monetary policy; while linking tax deductibility to VAT compliance was designed as an anti-avoidance measure.

Oyedele also noted that the Police Trust Fund expired in June 2025, making calls for its repeal unnecessary.

He added that the issues raised regarding small company exemptions predate the Finance Act 2021.

Oyedele highlighted that minor clerical inconsistencies or cross-referencing gaps were already being identified internally and would be addressed through administrative guidance and regulations.

“The tax reform represents a bold step toward a self-sustaining and competitive Nigeria,” the committee said, urging stakeholders to shift from “static critique to dynamic engagement” to support effective implementation.

He emphasised that the reforms were deliberate, comprehensive, and designed to improve fairness, competitiveness, and revenue generation.