The Manufacturers Association of Nigeria (MAN) has expressed strong concern about the proposed introduction of a Tax Stamp System for excisable goods in the country, given its potential negative implications for real sector’s performance.
The Director-General of the association, Mr Segun Ajayi-Kadir, caution that if administered as proposed by the Federal Government, the fiscal measure would impose significant compliance costs, create operational bottlenecks, and yield limited incremental revenue for businesses in the country.
While commending the government’s commitment to modernising and harmonising tax administration through the Nigeria Tax Act 2025,the Director-General recalled that the legislation had received positive feedback from manufacturers and other business owners by simplifying the tax framework and offering substantial relief, particularly to small and medium-sized enterprises (SMEs).
However, he expressed the need for cautious consideration regarding the Tax Stamp System, stressing that “while the intention to combat smuggling, counterfeiting, and enhance transparency is commendable, it’s crucial to examine the broader implications of such a proposal.”
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Ajayi-Kadir maintained that the concept of tax stamps was previously suggested in 2018 but ultimately not adopted, adding that the association hopes that this updated proposal will not lead to unintended consequences or undermine the progress made with the new tax act.
According to him, the Nigeria Tax Act 2025 has simplified taxation, providing necessary support to businesses, and introducing a tax stamp system could inadvertently add to the financial challenges faced by industries and complicate compliance.
The Director-General maintained that imposing tax stamps could unintentionally encourage illicit trade, as the added costs might deter compliance and adversely affect both government revenue and legitimate businesses.
He clarified: “We believe that producers and importers might increase prices to cover these compliance costs, putting additional strain on consumers and potentially driving them towards cheaper, illicit alternatives.”
Ajayi-Kadir pointed out that the MAN recognised the government’s investments in robust digital systems, such as the B’Odogwu Automated Excise Register System (ERS) by the Nigeria Customs Service and e-invoicing by the Federal Inland Revenue Service (FIRS), both of which already provided the transparency that the tax stamps intend to achieve without imposing further compliance burdens.
He lamented that as Nigerian manufacturers continued to be ripped off revenues with imported goods in regional markets, stressing that any additional costs from a tax stamp system could jeopardise the competitiveness of local products, especially in an environment where consumer demand is already affected by inflation, and also lead to a shift in consumer preferences toward less expensive imports, posing challenges for local manufacturers.
The Director-General further expatiated: “Research has shown that while tax stamp systems may superficially boost reported revenue, the compliance costs often outweigh their benefits. Historical data suggests that such systems can adversely impact small businesses’ profitability and tax compliance.”
Ajayi-Kadir supported the association’s stance on the proposed tax with experiences in other African nations, including Kenya, Uganda, and Ghana, noting that tax stamps can be effective only under specific conditions where strong enforcement and government support are present, while in many emerging markets, tax stamps administration can raise costs, shrink formal markets, and promote illicit alternatives.
He, therefore, urged the government not to succumb to the proposal to introduce Tax Stamps, but rather should strengthen existing digital fiscal tools and border controls to achieve compliance without imposing undue burdens on industry.
