DrealTaxHub

Tax & Financial Reporting Consultant || Financial Analyst || Associate Chartered Accountant (ACA) || IFRS & IAS tutor

[kenjakuibunyayudi @kenjakuibunya]

The ending caught me off guard! 😂

[DrealTaxHub @ridwanusman]

@FirstBankngr @FirstBankngr please we are currently experiencing network issues with mobile App transfer, this is getting me frustrated,

[Yomi Olugbenro @YomiOlugbenro]

I'm honored to lead a dynamic team dedicated to serving clients with excellence. West Africa is experiencing meaningful economic growth and is poised for technological transformation. I look forward to collaborating with our teams and stakeholders to drive long-term market growth. We will continue to harness the power of AI to drive innovation, deliver insight, and support our clients across our market to transform the future of work.

[Taiwo Oyedele @taiwoyedele]

𝐂𝐨𝐥𝐥𝐚𝐛𝐨𝐫𝐚𝐭𝐢𝐧𝐠 𝐖𝐢𝐭𝐡 𝐓𝐡𝐞 𝐓𝐚𝐱 𝐎𝐦𝐛𝐮𝐝 𝐟𝐨𝐫 𝐅𝐚𝐢𝐫 𝐓𝐚𝐱 𝐀𝐝𝐦𝐢𝐧𝐢𝐬𝐭𝐫𝐚𝐭𝐢𝐨𝐧

Yesterday, the Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) held a constructive meeting with the Office of the Tax Ombud (OTO) as part of ongoing efforts to support effective implementation of the tax reforms.

The Office of the Tax Ombud is an independent and impartial body established under the new tax laws to protect taxpayer rights, resolve complaints quickly and fairly, and build trust in the tax system through mediation and advocacy.

Our engagement focused on collaboration with the Tax Ombud given his critical role in ensuring that the reforms deliver not just better tax systems, but a fairer and more responsive tax administration for taxpayers.

[Taiwo Oyedele @taiwoyedele]

𝐑𝐞𝐬𝐩𝐨𝐧𝐬𝐞 𝐭𝐨 𝐊𝐏𝐌𝐆: 𝐎𝐛𝐬𝐞𝐫𝐯𝐚𝐭𝐢𝐨𝐧𝐬 𝐨𝐧 𝐍𝐢𝐠𝐞𝐫𝐢𝐚’𝐬 𝐍𝐞𝐰 𝐓𝐚𝐱 𝐋𝐚𝐰𝐬

---𝘉𝘺 𝘗𝘳𝘦𝘴𝘪𝘥𝘦𝘯𝘵𝘪𝘢𝘭 𝘍𝘪𝘴𝘤𝘢𝘭 𝘗𝘰𝘭𝘪𝘤𝘺 𝘢𝘯𝘥 𝘛𝘢𝘹 𝘙𝘦𝘧𝘰𝘳𝘮𝘴 𝘊𝘰𝘮𝘮𝘪𝘵𝘵𝘦𝘦

We welcome all perspectives that contribute to a shared understanding and successful implementation of the new tax laws. 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.

𝐆𝐞𝐧𝐞𝐫𝐚𝐥 𝐨𝐛𝐬𝐞𝐫𝐯𝐚𝐭𝐢𝐨𝐧𝐬

A significant proportion of the issues described as “errors,” “gaps,” or “omissions” by KPMG are either:

- the firm’s own errors and invalid conclusions,
- issues not properly understood by the firm,
- missed context on broader reforms objectives,
- areas where KPMG prefer different outcomes than the choices deliberately made in the new tax laws, and
- obvious clerical and editorial matters already identified internally.

While it is legitimate to disagree with policy direction, disagreements should not be framed as errors or gaps. KPMG would have been more effective if the firm adopted a similar approach like other professional firms who engaged directly providing the opportunity for clarifications and mutual-learning.

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

𝐏𝐨𝐥𝐢𝐜𝐲 𝐂𝐡𝐨𝐢𝐜𝐞𝐬 𝐚𝐧𝐝 𝐂𝐥𝐚𝐫𝐢𝐭𝐲 𝐨𝐧 𝐑𝐞𝐟𝐨𝐫𝐦𝐬

1. Taxation of Shares and the Stock Market

Contrary to the presumption that the new tax provisions on chargeable gains would trigger a sell-off on the stock market, the fact is that the applicable tax rate on share gains is not a flat 30%. The tax framework is structured from 0% to a maximum of 30%, which is set to reduce to 25%. Furthermore, a significant majority of investors (99%) are entitled to unconditional exemption, with others qualifying subject to reinvestment.

The market's performance, which is at an all-time high with increased investment flow, demonstrates investors understanding that the tax changes will enhance the fundamentals of firms both in terms of profitability and cash flows. 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.

2. Commencement Date and Transition

The suggestion to set the commencement date as the start of an accounting period (e.g., 1 January 2026) takes a narrow view of the complex transition issues. A wholesale reform affects myriad issues beyond the accounting period, spanning multiple periods, different bases of assessment (preceding year, actual year), as well as issues related to audit, deductions, credits, and penalties. Limiting the commencement to a single date for accounting periods would fail to address the intricacies of continuous transactions and other transition matters. KPMG’s proposal is therefore not a “gold standard” to be applied to all new laws as suggested.

3. Indirect Transfer of Shares

The new provision to tax indirect transfer of shares is a policy choice aligned with global best practices and BEPS initiatives. Its objective is to block a long-exploited tax loophole by multinationals and other investors, not to affect competitiveness. This is a common provision in international tax, and the assertion that it may affect the country's economic stability is disingenuous.

4. VAT Exemption on Insurance Premium

KPMG's point regarding a specific VAT exemption on insurance premium is technically unnecessary, as an insurance premium is not a "taxable supply" defined under the Nigeria Tax Act. Insurance relates to risk transfer, not the supply of goods or services subject to VAT. As this has always been the administrative and legal position, a specific amendment for exemption is academic. If it is not broken, don’t fix it.

𝐈𝐬𝐬𝐮𝐞𝐬 𝐑𝐞𝐟𝐥𝐞𝐜𝐭𝐢𝐧𝐠 𝐌𝐢𝐬𝐮𝐧𝐝𝐞𝐫𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐁𝐲 𝐊𝐏𝐌𝐆

5. Inclusion of 'Community' in Definition

The concern about the inclusion of “community” in the definition of a ‘person’ but its omission from the charging section does not constitute 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.’ This approach is consistent with modern legislative drafting principles, which use comprehensive definitions to streamline operative provisions and avoid redundancy. This is similar to the inclusion of partnerships and executors in the definition but not under the charging section. The use of the word “includes” further signifies that the list of taxable persons is not exhaustive.

6. Joint Revenue Board (JRB) Composition

The composition and mandate of the Joint Revenue Board (JRB) are intentional. Its policy advisory role is specifically to provide a subnational tax and revenue perspective that complements the fiscal policy mandate of the Ministry of Finance. Its membership is appropriately limited to revenue-focused agencies, which is why it is called the Joint Revenue Board. This is a similar composition under which the former JTB operated effectively, and its functions remain consistent with the need for inter-agency coordination.

7. Distinction in Dividend Treatment

KPMG's analysis appears to mix the distinction between a foreign-controlled company and a foreign operation of a Nigerian company. Dividends distributed by a foreign company cannot be "franked" since no Nigerian Withholding Tax (WHT) would have been deducted. Section 162(1)(s) confers exemption on dividend, interest, rent, or royalty derived from outside Nigeria and brought into Nigeria through approved channels. 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.

8. Non-Resident Registration and Final Tax

The view that a payment subject to deduction as final tax should automatically exempt the non-resident recipient from tax registration misses a critical distinction. While the law conditionally exempts passive income from registration, the deduction of tax on non-passive income is not synonymous with an exemption from registration or filing of returns. The same way that residents are required to file returns on income such as interest (in the case of individuals) and dividend where WHT is final. Returns serve a broader purpose beyond solely generating tax revenue.

𝐊𝐏𝐌𝐆’𝐬 𝐏𝐫𝐨𝐩𝐨𝐬𝐚𝐥𝐬 𝐓𝐡𝐚𝐭 𝐖𝐨𝐮𝐥𝐝 𝐔𝐧𝐝𝐞𝐫𝐦𝐢𝐧𝐞 𝐊𝐞𝐲 𝐑𝐞𝐟𝐨𝐫𝐦 𝐎𝐛𝐣𝐞𝐜𝐭𝐢𝐯𝐞𝐬

9. Tax on Foreign Insurance Premiums

The proposal to exempt foreign insurance companies from tax on premiums from insurance written in Nigeria to deepen penetration, while local insurance companies continue to pay tax, would be detrimental to the domestic insurance sector. 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.

10. Parallel Market Forex Deduction

The new law disallows tax deduction for the difference where a business buys foreign exchange in the parallel market at a premium over 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.

11. VAT Compliance-Linked Deductibility

The non-tax deduction for taxable transactions on which VAT has not been charged is a necessary anti-avoidance measure. It removes the advantage that some taxpayers previously enjoyed by patronising suppliers who evade VAT. This is a matter of fairness and is squarely within the control of a business to manage, especially given the provision for the self-charge of VAT. It also ensures that responsible businesses play their part in promoting voluntary tax compliance across the ecosystem.

12. Progressive Personal Income Tax

While KPMG acknowledges the reform objective of fairness and progressivity, the firm disagrees with a top marginal tax rate of 25% for the highest earners. In reality, the effective tax rate can be as low as 22% for an individual earning billions a year simply by contributing 10% to pension. This rate is competitive when compared to many other countries, including Angola 25%, Egypt 27.5%, Ghana 35%, Kenya 35%, the U.S. (Federal) 37%, South Africa 45%, and the U.K. 45%. So, the rate is not “oppressive” or one that will negatively affect economic growth as claimed, rather it ensures progressivity without compromising competitiveness. From a broader policy objective perspective, the increase in top marginal rate for high income earners and the reduction in corporate tax rate is designed to address the existing higher tax burden associated with business formalisation.

𝐅𝐚𝐥𝐬𝐞 𝐈𝐧𝐜𝐥𝐮𝐬𝐢𝐨𝐧 𝐚𝐧𝐝 𝐅𝐚𝐜𝐭𝐮𝐚𝐥 𝐄𝐫𝐫𝐨𝐫 𝐛𝐲 𝐊𝐏𝐌𝐆

13. Police Trust Fund

The Police Trust Fund was signed into law on May 24, 2019, with a six-year lifespan under section 2(2) of the Act, which ended in June 2025. Therefore, KPMG's point that the new tax law should be amended to repeal the taxing section of the Police Trust Fund Act is needless, as the provision no longer exists.

14. Small Company Verification

The analysis concerning the tax exemptions for small companies affecting large companies' obligations is not a new issue or an inconsistency in the new law. The small business threshold was introduced via the Finance Act 2021. This issue pre-dates the current tax laws and should not be presented as an error or omission simply by virtue of a higher tax exemption threshold under the new law.

𝐖𝐡𝐚𝐭 𝐊𝐏𝐌𝐆 𝐋𝐞𝐟𝐭 𝐎𝐮𝐭

While acknowledging the objectives of the reform, KPMG could have highlighted the major structural improvements under the new laws, including:
- simplification and tax harmonisation,
- the scope for reduction in corporate tax rate from 30% to 25%,
- expanded input VAT credits for businesses,
- tax exemption for low-income earners and small businesses,
- elimination of minimum tax on turnover and capital, and
- improved investment incentives for priority sectors.

A balanced assessment would have recognised these transformative elements, among others.

𝐂𝐨𝐧𝐜𝐥𝐮𝐬𝐢𝐨𝐧 𝐚𝐧𝐝 𝐖𝐚𝐲 𝐅𝐨𝐫𝐰𝐚𝐫𝐝

The tax reform is the result of an extensive consultation with various stakeholder groups in addition to the legislative process that included widely publicised public hearings, avenues intended for all stakeholders including international firms to provide technical expertise at the formative stage.

In any comprehensive overhaul of a nation’s tax framework, clerical inconsistencies or cross-referencing gaps may occur, and these are already being identified within the government. The tax reform represents a bold step toward a self-sustaining and competitive Nigeria.

An effective review needs to connect identified gaps to clear policy intents and the reality of modern-day tax systems within the context of economic development and global competitiveness.

At this stage, the effectiveness of the tax law depends on administrative guidance, clarifications from the tax authority, and regulations to complement precise statutory provisions where necessary pending future amendments.

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.

[National Orientation Agency, Nigeria @NOA_Nigeria]

https://t.co/L18X3Jfhul

[DrealTaxHub @ridwanusman]

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Lots of students are having issues with payment of examination fees on your website and no customers representative to attend to me

[DrealTaxHub @ridwanusman]

@hedrees_ayinde Wema Bank

UBA
Access Bank
Zenith Bank

[DrealTaxHub @ridwanusman]

@hedrees_ayinde Wema bank
Una
Access bank
Zenith Bank

[Idris Ayinde, FCA, CFA @hedrees_ayinde]

https://t.co/3llvM4noyI

[DrealTaxHub @ridwanusman]

@hedrees_ayinde Kwd
GBP
Eur
Pound

[DrealTaxHub @ridwanusman]

I’m going to @hedrees_ayinde’s upcoming Space. Will you join too?

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[DrealTaxHub @ridwanusman]

@KeekStatEducate Please what are the implications of the Nigerian tax bill in manufacturing companies

[Taiwo Oyedele @taiwoyedele]

RE- RMAFC POSITION ON PROPOSED VAT DISTRIBUTION FORMULA

CONTEXT

We are pleased to note the support of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) for the four tax reform bills presently before the National Assembly and the acknowledgement that the reforms are necessary to set our country on an inclusive growth trajectory for the benefit of all Nigerians.

Regarding the RMAFC’s position on the proposed VAT sharing formula, it is important to provide some context and highlight the issues which the reforms seek to address.

1. VAT was introduced via a decree in 1993 to replace the sales tax which was being administered by states at the time. While it is being centrally collected to ensure better efficiency and manage the intricacies of the multi-layered nature of VAT, there is a recognition that VAT remains a state tax.

2. Hence, 85% of the revenue is distributed to states with the federal government retaining only 15% which is a fraction of the VAT generated by the FCT and import VAT that ordinarily belong to the federal government. The sustained central collection and sharing formula therefore reflect this understanding among the tiers of government.

3. The tax predates the 1999 Constitution and despite having been in operation for over 5 years, the tax is not mentioned in the 1999 Constitution making it a residual matter within the purview of the states.

4. As a result of the above, VAT is paid into a special pool account and not treated along with the other revenues accruable to the federation for which the RMAFC is expected to play an advisory role regarding the sharing formula as contained in section 162 of the 1999 Constitution. A similar revenue item is stamp duties which also belong to states and it is meant to be shared among them based on 100% derivation without any requirement for the RMAFC to be involved in determining the sharing formula.

THE KEY ISSUES

The proposed VAT revenue sharing formula in the tax bills along with the other VAT reform proposals are meant to address key issues which are existential to the VAT regime as currently operated. There is a pending case by Rivers and Lagos states seeking to administer VAT as a state tax in view of the perceived inequity in the current distribution formula. In addition to the perceived unfairness of the distribution formula, the current derivation model is skewed in favour of head office locations, which mainly benefits Lagos and Rivers state. 

If the case, which is pending at the Supreme Court succeeds:

1. States will lose the opportunity to share VAT revenue among themselves as any revenue generated by each state will be retained 100%, i.e. 100% derivation model.

2. Import and international VAT will become the sole revenue of the federal government along with FCT VAT, which altogether account for more than 50% of the current VAT revenue compared to the 15% being shared by the federal government that is proposed to reduce to 10% under the tax bills in favour of states.

3. Moving away from the central collection of VAT will not only lead to significant revenue loss of over 50% for all the states, they will also face challenges in collecting VAT as evident from the old sales tax regime administered by states and the consumption tax being collected currently by some states.

4. This will make states and local governments vulnerable and further increase subnational fiscal risks with the attendant economic and social consequences.

5. There will also be challenges to commerce and interstate trade in addition to the cascading effect on inflation.

THE ROLE OF RMAFC

We note without conceding to the view expressed by the RMAFC regarding the proposed sharing formula. We believe that the focus should be on the ongoing engagements with key stakeholders to reach an acceptable position as a matter of priority.

From the Commission’s statements, it is clear that more understanding of the issue is required to enable more constructive contributions to the debate towards an effective resolution. Some of the concerns expressed which are either not applicable or only require some clarifications include: 

1. That VAT consumption needs to be determined based on taxpayer residence. This is not the case with VAT or any consumption tax unlike income tax.

2. The illustration regarding the purchase of an asset in Lagos for use in Kano does not pose any difficulties as VAT has an inbuilt mechanism for input and output VAT where only the VAT related to incremental value added in a jurisdiction will be attributed to such location with production treated as intermediate consumption at each stage of the production process prior to the final consumption.

3. There is no need for any technology to track the location of consumption, every eligible business will simply be required to indicate the location of sales in its VAT returns as stipulated under section 22(12) of the Nigeria Tax Administration Bill. It is not necessary to tag VAT collections to end-user locations from sale to consumption, neither is it practical to do so. Afterall we may not be able to tag services or creative work that are digitally delivered as intangible goods.

4. The horizontal distribution of VAT revenue among states is not based on a formula of 50% derivation, 35% population and 15% equality as stated by the Commission but rather 20% derivation, 50% equality and 30% population.

We are aware of various efforts by the RMAFC over the past decade including the nationwide consultation exercise on the review of the federation revenue sharing formula 3 to 4 years ago. Not only was VAT excluded from this exercise despite the apparent inequity in the distribution formula, the outcome of the revenue sharing consultation is yet to be concluded many years after. VAT administration is already under dispute, therefore seeking a political solution to avoid the risk of the tax being adjudged as a tax to be administered by states requires urgent action.

THE WAY FORWARD 

We look forward to the RMAFC joining the ongoing effort including consultation with key stakeholders to arrive at a generally acceptable outcome. This moment calls for a constructive and objective approach focusing on finding a workable solution, avoiding further controversies and working together in order to move our nation forward.

Taiwo Oyedele
Chairman, Presidential Fiscal Policy & Tax Reforms Committee

[DrealTaxHub @ridwanusman]

I’m going to @hedrees_ayinde’s upcoming Space. Will you join too?

https://t.co/7Pjf9NITcM

[DrealTaxHub @ridwanusman]

@AllahGreatQuran Masha Allah

[DrealTaxHub @ridwanusman]

what is good for the goose is also good for the gander
The cabals not NNPC are yet to Lift Dangote oil

[DrealTaxHub @ridwanusman]

Nigeria problem is not about rice

The government needs to do more good than harm to its citizens

[Imran Muhammad @Imranmuhdz]

The Federal Government has begins the sale of 30,000 metric tonnes of milled rice to the Nigerian populace at a subsidized price of N40,000 for each 50-kilogram bag.

On Thursday in Abuja, Abubakar Kyari officially launched the distribution of subsidized milled rice.

He said, “This food intervention can be said to be timely considering the times and challenges we are in as citizens of this great nation.

“It is my pleasure to welcome you all to this historical, all-important and long-awaited inauguration of the sales of 30,000MT of Federal Government milled rice to Nigerians at a subsidised rate of N40,000 per 50 kilogramme.

“This kind gesture was made possible at the expense and directives of President Bola Tinubu, who does not want Nigerians citizens to go to bed hungry; and in his wisdom deemed, it important to initiate this food intervention.”

[DrealTaxHub @ridwanusman]

@BBMOfficial2 If you can beat them then you Join them !!!

[DrealTaxHub @ridwanusman]

@7signxx Allah has a better Plan for you than you think
Greater heights