Business

Manufacturers Condemn Exploitative Tax Stamp System, call for caution

BY BONNY AMADI

The Nigerian government has been called upon to exercise restraint in introducing a tax regime that will worsen the plight of industrialists and erode gains recorded in the country’s reformed tax system.

The Manufacturers Association of Nigeria (MAN) expressed concerns over the proposed introduction of a tax stamp system for excisable goods in Nigeria.

Segun Ajayi-Kadir, MAN, director-general, in a statement on Wednesday said that tax stamps often hinder local industry, erode gains in tax simplification, and yield a limited revenue impact.

He however lauded the government’s efforts to harmonise and modernise tax administration, and promote greater accountability within Nigeria’s tax system through the enactment of the Nigeria Tax Act 2025.

Segun Ajayi-Kadir, MAN, DG said, “Our members widely welcomed the laws as they provide a simplified tax framework, harmonise the tax regime and deliver relief to industries, particularly the small and medium-sized industries (SMIs).

We are therefore disturbed about an imminent distraction from this positive narrative in the form of a possible introduction of a tax stamp system for excisable goods.

He explained that the manufacturers body, understands that the government’s consideration is predicated on the supposed benefits of curbing smuggling and counterfeiting, enhancing transparency and traceability in the excise regime, and sup- porting revenue growth.

“As we stated in 2018 when the tax stamp was initially suggested to the government and was roundly rejected, this fleeting proposition is typically the refrain of vendors who propose tax stamps as a measure against illicit trade,” the association said.

It said while the efficacy of this measure is yet to be validated, findings indicate that tax stamps portend significant adverse implications without tangible benefits.

MAN noted that the proposed tax stamp system warrants careful reflection and caution.

“We firmly believe that while the intention is understandable, evidence around the world shows that the tax stamp system often imposes heavy compliance costs, creates operational bottlenecks, and yields limited incremental revenue,” it said.

MAN urged that the introduction of a tax stamp system risk clawing back these gains, effectively imposing a new “hidden tax” on industries under the guise of compliance.

It said such a measure is tantamount to “giving with one hand and taking back with the other,” undermining the relief granted under the 2025 Tax Act.

“SMIs, in particular, would bear disproportionate burdens, weakening the federal government’s drive to promote local manufacturing and job creation.”

Ultimately, it said the high logistical costs and risks associated with tax stamps primarily benefit the vendor, not the government or the industry

 

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