The Manufacturers Association of Nigeria (MAN) has issued a strong warning to the Federal Government over reported plans to introduce a tax stamp system for excisable goods, cautioning that such a move could increase operational burdens, inflate costs, and deliver minimal revenue benefit.
In a statement on Tuesday, MAN Director General, Segun Ajayi-Kadir, said while manufacturers are supportive of the Nigeria Tax Act 2025 which harmonizes the tax regime and offers relief, particularly to small and medium-sized industries (SMIs), the proposed tax stamp framework threatens to undermine those gains.
“This new consideration appears to be motivated by intentions to curb smuggling and counterfeiting, enhance traceability, and boost revenue. While these goals are commendable, global evidence suggests that tax stamp systems often impose significant compliance costs, create operational bottlenecks, and yield marginal revenue improvements,” Ajayi-Kadir said.
Rising Concerns from Industry
MAN outlined several critical concerns that it believes should give the government pause before implementing the system. Chief among them:
- Contradiction with the Nigeria Tax Act 2025: The system may reverse the simplicity and relief the Act seeks to provide.
- Higher Consumer Prices: Manufacturers and importers are likely to pass new compliance costs down the chain, leading to inflationary pressure.
- Competitive Disadvantage: Nigerian products may become less competitive under the African Continental Free Trade Area (AfCFTA), especially when compared to imports.
- Risk of Illicit Trade Surge: As regulated operators face new costs and restrictions, illicit actors may exploit loopholes, increasing unregulated trade.
- Costly Implementation: Setting up a tax stamp system comes with major logistical and financial challenges that could outweigh its benefits.
Ajayi-Kadir also questioned the necessity of tax stamps when Nigeria has already deployed robust digital compliance tools that serve similar purposes.
He pointed to the B’Odogwu Automated Excise Register System (ERS) launched by the Nigeria Customs Service, which digitizes excise tracking and offers real-time visibility into production and shipment of excisable goods.
Additionally, he cited the Federal Inland Revenue Service’s (FIRS) e-invoicing system, which captures production and sales data electronically.
“These home-grown tools already offer the transparency and traceability that tax stamps promise but without adding redundant and costly layers of compliance,” he said.
MAN emphasized that the timing of the proposal is especially troubling, as the industrial sector is already facing serious headwinds including:
- Escalating excise duties
- Soaring energy costs
- Chronic power shortages
- Persistently high inflation
“Introducing tax stamps under these conditions is a direct threat to the sustainability of the manufacturing sector,” Ajayi-Kadir warned.
He urged the Federal Government to reconsider the proposal and instead focus on optimizing existing digital platforms, supporting local industries, and promoting investment confidence.
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