Government Defends Tax Reforms Amid Criticism

By FIDELUS ZWANSON

Tax Reform Controversy as Oyedele Challenges KPMG’s Findings

A Law Under the Microscope

NIGERIA’S newly enacted tax laws are facing intense scrutiny after a Dutch global accounting firm Klynveld Peat Marwick Goerdeler (KPMG) released a detailed review identifying perceived inconsistencies and policy gaps. While the firm acknowledged the law’s revenue potential, it warned that unresolved ambiguities could undermine economic growth and compliance.

The review has now drawn a firm response from Taiwo Oyedele, who leads the Presidential Fiscal Policy and Tax Reforms Committee.

Disagreement Over “Errors” and “Policy Choices”

Oyedele argued that most of KPMG’s conclusions represent differences in policy preference rather than genuine drafting errors. He said the firm failed to appreciate the broader objectives of the reforms, which focus on simplification, harmonisation, and long-term sustainability.

According to him, professional disagreement should not be framed as evidence of loopholes in the law.

Key Areas Raised by KPMG

KPMG highlighted several provisions it believes require amendment, including:

• The definition of taxable persons, particularly the implied inclusion of communities.

• The treatment of foreign dividends and undistributed profits.

• Withholding tax on non-resident insurance premiums.

• Limitations on foreign exchange deductions tied to official exchange rates.

• The absence of explicit rules on capital loss deductions.

The firm also pointed to the omission of hydrocarbon tax rates for deep offshore operations, warning of potential conflicts with the Petroleum Industry Act.

Official Clarifications

Oyedele maintained that the law deliberately differentiates between local and foreign entities for tax purposes and that these distinctions are consistent with international practice.

He also described KPMG’s concerns about VAT exemptions on insurance premiums as unnecessary, noting that insurance premiums are not considered taxable supplies under the new framework.

On the Police Trust Fund, Oyedele stated that calls to repeal its taxing provision are irrelevant, as the law governing the fund expired in June 2025.

Reforms the Government Says Matter Most

The reform committee chairman stressed that the tax laws introduce major benefits, including lower corporate tax rates, broader VAT credits, exemptions for vulnerable taxpayers, and stronger investment incentives.

With implementation underway, policymakers say dialogue with stakeholders will continue, but insist the reforms represent a deliberate shift toward a more efficient tax system.