The Manufacturers Association of Nigeria (MAN) has expressed concern that a possible introduction of a Tax Stamp System for excisable goods will contradict the federal government’s efforts to harmonise and modernise Nigeria tax administration and promote greater accountability.
MAN noted that while the intention to introduce the tax stamp system was understandable, evidence around the world has shown that the Tax Stamp System often imposes heavy compliance costs, creates operational bottlenecks, and yields limited incremental revenue.
These views were expressed on Tuesday, by the Director General of MAN, Mr. Segun Ajayi-Kadir, in a statement titled “MAN Cautions on The Possible Introduction of Tax Stamp System for Excisable Products.”
Ajayi-Kadir noted that, as in 2018 when the Tax Stamp was initially suggested to the government and was roundly rejected, the fleeting proposition was typically the refrain of vendors who propose tax stamps as a measure against illicit trade, adding that findings indicated that tax stamps portend significant adverse implications without tangible benefits.
He said: “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.
“MAN understands that this consideration is predicated on the supposed benefits of curbing smuggling and counterfeiting, enhancing transparency and traceability in the excise regime, and supporting revenue growth.
He added: “MAN strongly urges the federal government to exercise caution in introducing a Tax Stamp System in Nigeria.”
According to him, experiences in the international environment have shown that tax stamps often hinder local industry, erode gains in tax simplification, and yield a limited revenue impact.
He said: “We, therefore, implore the government not to succumb to the proposal to introduce Tax Stamps, instead government should strengthen existing digital fiscal tools and border controls to achieve compliance without imposing undue burdens on industry.”
Ajayi-Kadir said that the proposed stamp tax could contradict the Nigeria Tax Act 2025 that consolidated and rationalised taxes, providing businesses, especially Small, Medium Industries (SMIs) with relief from multiple levies.
He said: “The introduction of a tax stamp system risks clawing back these gains, effectively imposing a new ‘hidden tax’ on industries under the guise of compliance.
“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.”
Ajayi-Kadir is also concerned that, “there is a tendency that the Nigerian market risks an upsurge in illicit trade, which will erode government revenue, harm legitimate businesses, and jeopardise consumer safety.”
He also said manufacturers and importers might raise prices to recover compliance costs, which would further strain consumers and potentially drive them toward cheaper, illicit alternatives.
Ajayi-Kadir pointed out that the government has already invested in home-grown digital systems that could deliver full visibility of excise operations.
He pointed out that the Nigeria Customs Service (NCS) has launched the B’Odogwu Automated Excise Register System (ERS), digitised excise tracking, and is providing real-time visibility.
He added that the Federal Inland Revenue Service (FIRS) has also implemented e-invoicing, which captures production and sales data.
“These tools already give government the visibility that tax stamps claim to provide without adding redundant layers,” Ajayi-Kadir said.
He also said that it was pertinent to note that Nigerian manufacturers compete with imported brands within African Continental Free Trade Area (AfCFTA) and beyond.
Therefore, “introducing additional costs in the form of tax stamp will increase production costs and render locally made products less competitive in regional markets.
“The implementation of a tax stamp system will inevitably raise production costs and discourage local patronage.
“At a time when households are already grappling with high inflationary pressures, the introduction of tax stamps would push consumers toward cheaper imported alternatives, fuel illicit trade, and risk driving local manufacturers out of the market,” he said.
He further argued that international studies have shown that while stamp systems could increase reported excise revenue, the compliance costs (borne by manufacturers) often exceed the marginal revenue gains.
He said: “In particular, a 2020 academic study from the University of Cape Coast found that compliance costs significantly affect small taxpayers’ profitability and tax compliance in Ghana.”
According to him, “paper-based tax stamps, in particular, are prone to falsification, making it extremely difficult for consumers and retailers to distinguish between genuine and counterfeit products.
“In the same vein, our experience in other markets equally shows that digital stamps are counterproductive, cutting productivity by up to 40 per cent, and have not reduced illicit trade.
“So, in all cases, rather than strengthening enforcement, tax stamps have not abated the circulation of counterfeit goods, they undermine both government revenue and the profitability of legitimate industry players.”
Other implications of the implementation of tax stamp, according to MAN, included significant economic and operational burdens; rationalisation of workforce by organisations, limitation on reinvestment, stifled innovation, and discouragement of new market entrants.
Dike Onwuamaeze
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