The Manufacturers Association of Nigeria (MAN) has expressed concerns over the proposed introduction of a tax stamp system for excisable goods in Nigeria.
A statement on Wednesday signed by Segun Ajayi-Kadir, MAN, director-general appreciates the government’s efforts to harmonise and modernise tax administration, and promote greater accountability within Nigeria’s tax system through the enactment of the Nigeria Tax Act 2025.
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However, MAN said tax stamps often hinder local industry, erode gains in tax simplification, and yield a limited revenue impact.
“Our members widely welcomed the laws as they provide a simplified tax framework, harmonise the tax regime and deliver relief to industries, particularly the small and medium-sized industries (SMIs). 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.
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“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.
“As we stated in 2018 when the tax stamp was initially suggested to the government and was roundly rejected, this fleeting proposition is typically the refrain of vendors who propose tax stamps as a measure against illicit trade,” the association said.
It said while the efficacy of this measure is yet to be validated, findings indicate that tax stamps portend significant adverse implications without tangible benefits.
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Concerns
MAN noted 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,” it said.
MAN urged that 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.
It said 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.”
Ultimately, it said the high logistical costs and risks associated with tax stamps primarily benefit the vendor, not the government or the industry.
It explained 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.
MAN added that the producers and importers may raise prices to recover compliance costs, further straining consumers and potentially driving them toward cheaper, illicit alternatives.
The association said the government has already invested in home-grown digital systems that can deliver full visibility of excise operations.
“The Nigeria Customs Service had launched the B’Odogwu Automated Excise Register System (ERS), digitising excise tracking and providing real-time visibility.
“The Federal Inland Revenue Service (FIRS) has also implemented e-invoicing, which captures production and sales data. These tools already give the government the visibility that tax stamps claim to provide without adding redundant layers.
“It is pertinent to note that Nigerian manufacturers compete with imported brands within AfCFTA and beyond. Introducing additional costs in the form of tax stamp will increase production costs and render locally made products less competitive in regional markets,” it said.
The association said 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.
“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.”
Beyond effectiveness concerns, the association said the implementation of tax stamps comes with significant economic and operational burdens.
“Added costs could force producers and distributors to cut jobs across the value chain. Higher operating costs would limit reinvestment, stifle innovation, and discourage new market entrants,” it added.
Recommendations
The association called on the government to be wary of and reject any persuasion to rollout or implement excise tax stamps, in whatever guise or form it may take, until a comprehensive stakeholder engagement process is undertaken and an inclusive impact assessment study is carried out.
MAN recommended relying on existing digital systems (ERS and E-invoicing) which already provide end-to-end tracking and transparency, avoiding duplication and unnecessary vendor-driven solutions.
“Protect the gains of the 2025 Tax Reform Acts by avoiding measures that reintroduce complexity and costs, particularly for SMIs. Seeks a transparent framework for policy design and implementation that balances the government’s revenue goals with the need for a fair and conducive business environment,” it added.
MAN urged the government to adopt smarter and more cost-effective alternatives that strengthen tax compliance enforcement rather than imposing blanket excise tax stamps that will unduly burden manufacturers.
“Targeted border enforcement will help curb leakages and smuggling, digital traceability pilots can provide transparent and real-time monitoring of products, while risk-based audits will ensure that compliance efforts are focused where risks are highest,” it said.
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MAN urged the federal government to exercise caution in introducing a tax stamp system in Nigeria.
“Experiences in the international environment shows that tax stamps often hinder local industry, erode gains in tax simplification, and yield a limited revenue impact.
“We, therefore, implore the government not to succumb to the proposal to introduce tax stamps, instead the government should strengthen existing digital fiscal tools and border controls to achieve compliance without imposing undue burdens on industry,” the association said.
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