Excisable goods: MAN cautions FG on introduction of tax stamp

The Manufacturers Association of Nigeria (MAN) has cautioned the federal government against the possible introduction of tax stamp system for excisable goods in Nigeria, warning of the risks of heavy compliance costs, increased operational bottlenecks, with limited incremental  revenue.

In a statement yesterday, Director General of MAN, Segun Ajayi-Kadir, said while manufacturers welcome the enactment of the Nigeria Tax Act 2025 which provides a simplified tax framework, harmonize the tax regime and delivers relief to industries, particularly the small and medium-sized industries (SMIs), they however view the possible introduction of a tax stamp system for excisable goods as a distraction from the positive narrative of the new tax laws.

“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.

“However, as a critical stakeholder, MAN notes with concern 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,” he said.

Highlighting some of the  concerns of the manufacturers,  Ajayi-Kadir said the move contradicts the Nigeria Tax Act 2025, and could lead to upsurge in illicit trade; increased costs that would be passed to consumers as producers and importers may raise prices to recover compliance costs; risks to industry competitiveness, as Nigerian manufacturers compete with imported brands within AfCFTA and beyond.

He added that the tax stamp system can also lead to increased production costs and reduced consumer demand; revenue loss and higher costs; increased circulation of counterfeit goods; costly implementation that with significant economic and operational burdens.

MAN also noted that the government has already invested in home-grown digital systems that can deliver full visibility of excise operations, citing the B’Odogwu Automated Excise Register System (ERS) launched by the Nigeria Customs Service, digitizing excise tracking and providing real-time visibility, and the e-invoicing implemented by the Federal Inland Revenue Service (FIRS) 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 stated.

“In  view  of  the  above,  MAN is worried that a tax stamp policy is coming at a time when industrial operators are already grappling with rising excise rates, high energy prices, inadequate energy supply, and high inflation, making the additional burden of implementing tax stamps a serious threat to industrial sustainability” he added