Beyond Rebuttal: Reading Between the Lines of Tax Reform Debate
By Zekeri Idakwo Laruba
Nigeria’s ongoing tax reform conversation has taken on a new dimension following the Presidential Fiscal Policy and Tax Reforms Committee’s response to a technical review published by KPMG. At first glance, the document appears to be a firm rebuttal, point-by-point, unapologetic, and resolute. But beneath the surface, it reveals something deeper: a philosophical clash over what tax reform should prioritise in a developing economy struggling with revenue mobilisation, informality, and macroeconomic instability.
This is not merely a disagreement over drafting details. It is a contest between policy sovereignty and professional orthodoxy, between long-term fiscal restructuring and short-term compliance comfort.
A central thesis of the Committee’s response is that many of KPMG’s observations mistake deliberate policy choices for technical errors. On this score, the Committee makes a legitimate and important point. Tax laws are not neutral accounting instruments; they are tools of economic governance. Disagreeing with their outcomes does not automatically render them flawed.
In areas such as the taxation of indirect share transfers, VAT compliance-linked deductibility, and the disallowance of parallel market foreign exchange premiums, the Committee’s defence is both coherent and globally aligned. These provisions mirror international anti–base erosion standards and reflect a conscious attempt to harmonise fiscal and monetary policy. Labeling them as threats to competitiveness, without equal consideration of revenue leakage and market distortion, weakens the credibility of such critiques.
However, the Committee’s insistence on framing many concerns as “misunderstandings” risks oversimplifying legitimate implementation anxieties.
KPMG’s review, while sometimes preference-driven, reflects the mindset of businesses and investors who operate in an environment where clarity, predictability, and administrative simplicity are not luxuries but necessities. Concerns around commencement dates, transition arrangements, non-resident registration obligations, and reliance on post-enactment guidance are not academic.
Nigeria’s tax administration, though improving, still grapples with uneven enforcement capacity, delays in regulatory issuance, and protracted dispute resolution. In such a context, even technically sound provisions can generate uncertainty costs that dampen compliance and investment. The Committee’s response would have been stronger if it acknowledged this structural reality rather than assuming optimal administrative execution.
One of the more debatable aspects of the response is the reliance on stock market performance as evidence that fears around share taxation are unfounded. While market buoyancy is encouraging, it is influenced by multiple variables, liquidity conditions, inflation expectations, foreign exchange reforms, and political signals among them. Attributing bullish performance primarily to investor comfort with new tax laws risks overstating causality.
KPMG’s warnings may be overstated, but market optimism alone is not a conclusive rebuttal.
Where the Committee is most persuasive is in its equity argument. Progressive personal income tax rates, protection of local insurance firms, and the removal of incentives that reward VAT evasion or parallel market activity reflect a conscious effort to rebalance Nigeria’s tax burden. In a system historically skewed against compliant formal businesses and wage earners, this recalibration is defensible.
The comparative analysis of top marginal tax rates also undercuts claims that Nigeria’s reforms are “oppressive.” When viewed alongside peer economies, the new rates remain competitive, especially when deductions and exemptions are factored in.
Perhaps the most telling part of the Committee’s response is what it accuses KPMG of leaving out: the broader structural gains embedded in the reforms. Reduced corporate tax rates, expanded VAT credits, exemptions for low-income earners and small businesses, and the elimination of minimum tax provisions represent meaningful shifts toward growth-oriented taxation.
Yet these positives appear late in the response, almost as an afterthought. Leading with these gains would have reframed the debate from one of defensive rebuttal to forward-looking reform narrative.
Ultimately, this exchange should not be reduced to a winner-takes-all contest between government and consultants. Both sides are speaking to different risks: the state to revenue integrity and macroeconomic stability; professional firms to compliance friction and investor confidence.
The success of Nigeria’s tax reform will not be determined by how convincingly it is defended on paper, but by how effectively it is implemented on the ground. Clear administrative guidance, consistent enforcement, responsive dispute resolution, and ongoing stakeholder engagement will matter more than any single clause in the law.
The challenge now is to move beyond static critique and defensive rebuttals toward collaborative calibration. That is where reform credibility is either earned, or lost.