MAN Cautions Against Introduction of Tax Stamp System for Excisable Goods

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The Manufacturers Association of Nigeria (MAN) has raised significant concerns over the potential introduction of a tax stamp system for excisable goods, warning that such a move could undermine the government’s recent tax reforms and place an additional financial burden on local industries.

While the association acknowledges the government’s efforts to modernise tax administration through the Nigeria Tax Act 2025, it believes the tax stamp proposal could have far-reaching negative effects.

In a statement released to the press, MAN expressed support for the government’s initiative to simplify the tax regime, particularly benefiting small and medium-sized industries (SMIs).

However, the association noted that the introduction of a tax stamp system could jeopardise the gains made under the new tax laws.

Key Concerns Raised by MAN

MAN’s statement highlighted several concerns about the proposed tax stamp system, which the association believes could negatively impact manufacturers and consumers.

Contradiction with the Nigeria Tax Act 2025
MAN pointed out that the Tax Act 2025 was designed to streamline and consolidate various taxes, reducing the burden on businesses, particularly SMIs.

The proposed tax stamp system, however, could reverse these efforts by introducing a “hidden tax” that would disproportionately affect smaller businesses. This could undermine the government’s goal of promoting local manufacturing and job creation, especially in light of ongoing economic challenges.

Risk of Increased Illicit Trade
According to MAN, the high logistical costs and complexity of implementing a tax stamp system could inadvertently benefit vendors rather than the government or legitimate businesses.

The association warned that these added costs might fuel illicit trade, as consumers and retailers seek cheaper, untaxed alternatives, ultimately eroding government revenue.

Higher Costs Passed to Consumers
The introduction of tax stamps would increase compliance costs for manufacturers and importers, which could lead to higher prices for excisable goods.

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This, in turn, could place additional strain on consumers, many of whom are already grappling with high inflation. MAN expressed concern that higher prices would drive consumers toward cheaper, illicit alternatives, further exacerbating the problem of counterfeit goods.

Existing Digital Systems Already Provide Transparency
The association also pointed out that the Nigerian government has already invested in digital systems, such as the B’Odogwu Automated Excise Register System (ERS) and e-invoicing by the Federal Inland Revenue Service (FIRS).

These tools already provide the transparency and traceability that tax stamps claim to offer, without the additional costs and operational burden.

MAN called on the government to optimise and expand these existing systems rather than introduce a new, redundant framework.

Impact on Competitiveness
MAN warned that the introduction of a tax stamp system would increase production costs for Nigerian manufacturers, making their products less competitive in both the local and regional markets.

With Nigeria’s manufacturers already facing stiff competition from imported goods under the African Continental Free Trade Area (AfCFTA), the additional cost burden could reduce local production capacity and consumer demand.

International Experience Shows Limited Success
MAN cited international examples of tax stamp systems in countries like Kenya, Ghana, Tanzania, and Uganda, where such systems have faced significant challenges. These include high compliance costs, operational strains on small businesses, and continued illicit trade despite the introduction of tax stamps. In many cases, the cost of compliance outweighed the marginal revenue gains from the system.

MAN’s Recommendations

In light of these concerns, MAN made several recommendations to the government:

Reject the Tax Stamp Proposal: MAN urged the government to refrain from implementing the tax stamp system until a thorough stakeholder engagement and impact assessment are conducted.

Strengthen Existing Systems: The association called for the expansion and optimisation of existing digital systems, such as ERS and e-invoicing, which already provide effective tracking and transparency without imposing additional costs on manufacturers.

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Focus on Targeted Enforcement: Instead of implementing a blanket tax stamp system, MAN suggested that the government should adopt more targeted enforcement strategies, such as border enforcement, digital traceability pilots, and risk-based audits, to combat smuggling and improve compliance.

Protect the Gains from the Tax Reform: MAN emphasised the importance of preserving the gains made under the 2025 Tax Reform Acts, urging the government to avoid measures that would reintroduce complexity and additional costs for industries, particularly SMIs.

MAN has strongly cautioned against the introduction of a tax stamp system, urging the government to consider the potential negative impacts on local industries, consumers, and the broader economy.

Drawing on international experiences and emphasising the effectiveness of existing digital systems, MAN called for policies that support local manufacturing and job creation while ensuring transparency and compliance.

The association stressed the need for a balanced approach that fosters a conducive business environment without imposing undue burdens on manufacturers

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Sunday Micheal OGWU

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Sunday Michael Ogwu is a Nigerian journalist and editor of Pinnacle Daily. He is known for his work in business and economic reporting. He has held editorial roles in prominent Nigerian media outlets, where he has focused on economic policy, financial markets, and developmental issues affecting Nigeria and Africa more broadly.