MAN Warns Against Tax Stamps, Cites Potential Economic Burden

The Manufacturers Association of Nigeria (MAN) has expressed beardown reservations astir the projected instauration of a Tax Stamp System for excisable goods successful Nigeria.

MAN stated that the strategy would enforce important compliance costs, make operational bottlenecks, and output constricted incremental revenue.

The director-general of MAN, Segun Ajayi-Kadir, acknowledged the Nigerian government’s committedness to modernising and harmonising taxation medication done the Nigeria Tax Act 2025.

He highlighted that the enactment had received affirmative feedback from relation members for simplifying the taxation model and offering important relief, peculiarly to tiny and medium-sized industries (SMIs).

However, helium expressed the request for cautious information regarding the Tax Stamp System, stating, “While the volition to combat smuggling, counterfeiting, and heighten transparency is commendable, it’s important to analyse the broader implications of specified a proposal.”

Ajayi-Kadir recalled that the conception of taxation stamps was antecedently suggested successful 2018 but yet not adopted, and helium hopes that this updated connection would not pb to unintended consequences oregon undermine the advancement made with the caller taxation act.

He pointed retired that the enactment had already simplified taxation, providing indispensable enactment to businesses, and introducing a taxation stamp strategy could inadvertently adhd to the fiscal challenges faced by industries and complicate compliance.

MAN stated that imposing taxation stamps could unintentionally promote illicit trade, arsenic the added costs mightiness deter compliance and adversely impact some authorities gross and morganatic businesses.

“We judge that producers and importers mightiness summation prices to screen these compliance costs, putting further strain connected consumers and perchance driving them towards cheaper, illicit alternatives,” Ajayi-Kadir explained.

MAN besides recognised the government’s investments successful robust integer systems, specified arsenic the B’Odogwu Automated Excise Register System (ERS) by the Nigeria Customs Service and e-invoicing by the Federal Inland Revenue Service (FIRS), which already supply the transparency that the taxation stamps mean to execute without imposing further compliance burdens.

According to Ajayi-Kadir, arsenic Nigerian manufacturers vie with imported goods successful determination markets, the relation emphasises that immoderate further costs from a taxation stamp strategy could jeopardise the competitiveness of section products, particularly successful an situation wherever user request is already affected by inflation.

This could pb to a displacement successful user preferences toward little costly imports, posing challenges for section manufacturers.

“Research has shown that portion taxation stamp systems whitethorn superficially boost reported revenue, the compliance costs often outweigh their benefits. Historical information suggests that specified systems tin adversely interaction tiny businesses’ profitability and taxation compliance.”

Ajayi-Kadir referenced experiences successful different African nations, including Kenya, Uganda, and Ghana, noting that taxation stamps tin beryllium effectual lone nether circumstantial conditions wherever beardown enforcement and authorities enactment are present. In galore emerging markets, these systems tin rise costs, shrink ceremonial markets, and beforehand illicit alternatives.

MAN DG implored the authorities not to succumb to the connection to present Tax Stamps; instead, the authorities should fortify existing integer fiscal tools and borderline controls to execute compliance without imposing undue burdens connected industry.