Manufacturers Raise Alarm Over Proposed Tax Stamp System

The Manufacturers Association of Nigeria (MAN) has sounded the alarm over the Federal Government’s possible introduction of a Tax Stamp System for excisable products, warning that the move could undo the gains of the recently enacted Nigeria Tax Act 2025 and worsen the challenges facing local manufacturers.

In a detailed statement, MAN’s Director General, Segun Ajayi-Kadir, mni, praised government efforts to harmonize the tax regime through the 2025 Act, which simplified compliance, reduced multiple levies, and offered relief to small and medium-sized industries (SMIs). But he cautioned that tax stamps would be a major setback.

“Evidence around the world shows that such systems impose heavy compliance costs, create bottlenecks, and yield limited revenue gains. Introducing tax stamps now would be like giving with one hand and taking back with the other,” Ajayi-Kadir stated.

Expert Reactions and Insights

Tax analysts, economists, and industry stakeholders have echoed MAN’s concerns, warning that the policy risks undermining Nigeria’s manufacturing sector at a fragile economic moment.

Dr. Femi Olaleye, a tax policy consultant, explained that tax stamps tend to look attractive on paper but rarely deliver the promised benefits.

“Tax stamps are often vendor-driven, costly, and bureaucratic. In most emerging markets, they increase costs for legitimate businesses while illicit traders simply find new ways to bypass the system,” he said.

An economist at the University of Lagos, emphasized the consumer impact:

“Any increase in compliance costs will ultimately be passed down to consumers. With inflation already squeezing households, tax stamps could drive more Nigerians toward cheaper, unregulated, and potentially dangerous products.”

From a business competitiveness perspective, Mr. Femi Abiodun, a supply chain expert, highlighted the risk of weakening Nigeria’s position under the African Continental Free Trade Area (AfCFTA).

“Nigerian manufacturers are already competing with cheaper imports. Adding another layer of costs will erode competitiveness, discourage investment, and could force some firms to shut down or relocate,” Popoola warned.

Why MAN Is Concerned

1. Contradiction with Tax Act 2025 – Risk of creating a new “hidden tax,” reversing gains for SMIs.
2. Illicit Trade Risks – Potential rise in counterfeit and smuggled goods instead of curbing them.
3. Consumer Burden – Price hikes as producers offset compliance costs.
4. Redundant Systems – Nigeria already has ERS (Excise Register System) and FIRS e-invoicing tracking excise products digitally.
5. Competitiveness Threat – Higher costs would weaken Nigeria’s regional trade position.
6. Employment & Investment Risks – Likely job cuts, lower reinvestment, and stifled innovation.

Lessons from Abroad

Countries such as Kenya, Ghana, Uganda, and Tanzania have rolled out tax stamp systems with mixed or negative outcomes, often leading to high compliance costs, limited revenue gains, and persistent illicit trade. Even advanced economies like the United Kingdom have scaled back stamp regimes, labeling them outdated and inefficient.

“The international experience shows us that without strong enforcement and government subsidies, tax stamps hurt industries more than they help revenue collection,” noted Dr. Olaleye.

MAN’s Call to Government

• Reject vendor-driven tax stamp proposals until comprehensive stakeholder engagement and impact assessments are completed.
• Rely on existing digital solutions (ERS, e-invoicing) already in place for transparency and traceability.
• Focus on smarter enforcement tools such as targeted border checks, digital traceability pilots, and risk-based audits.
• Protect the reliefs provided by the Tax Act 2025, particularly for SMIs.

Ajayi-Kadir warned that the timing of this proposal is especially dangerous, given rising energy costs, high excise rates, and inflationary pressures.

“At a time when industries are already under strain, tax stamps would not only raise costs but also risk job losses and push legitimate manufacturers out of the market. We urge government to avoid this costly mistake,” he concluded.

The Manufacturers Association of Nigeria (MAN) and industry experts warn against the proposed Tax Stamp System for excisable products, citing risks of job losses, higher costs, reduced competitiveness, and reversal of gains under the Nigeria Tax Act 2025.