The Manufacturers Association of Nigeria (MAN) has voiced concerns over the detrimental effects of multiple taxation on manufacturers across Nigeria and their participation in the African Continental Free Trade Area (AfCFTA) agreement.
Segun Ajayi-Kadir, the Director General of MAN, addressed the ongoing annual tax conference of the Chartered Institute of Taxation of Nigeria in Abuja, highlighting the challenges faced by manufacturers due to increased taxation for Internally Generated Revenue.
According to him, the situation has resulted in heavier tax burdens than anticipated, impacting manufacturers’ profitability and competitiveness.
Ajayi-Kadir pointed out that overlapping taxes from federal, state, and local levels have created compliance burdens, operational inefficiencies, and reduced profitability for manufacturers.
”Taxes such as sales tax, Value Added Tax, mobile advertising charges, education levies, tenement rates, land use charges, and parking fees contribute to financial burdens, hindering investment incentives,” he lamented.
He stressed that multiple taxation discourages investment, stifles entrepreneurship, and hampers economic growth, particularly affecting Small and Medium-sized Enterprises disproportionately.
”Moreover, the competitiveness of Nigerian manufacturers in the global trading environment has declined due to the burden of multiple taxes, potentially hindering their ability to leverage the opportunities presented by the AfCFTA,” he added.
While urging the government to ensure compliance with tax identification numbers (TIN) and tax returns to prevent leakages of multiple taxations, Ajayi-Kadir emphasised the need for comprehensive reviews of statutory requirements, legal and policy frameworks, and the harmonisation of taxes to eradicate the multiplicity of taxes.
In response, Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, highlighted the high cost of operation faced by manufacturers, including energy costs, logistics costs, supply chain challenges, forex volatility, and customs duty exchanges.
He called for a more sustainable business environment and stability in the foreign exchange market to enhance investor confidence and reduce costs.
Yusuf reiterated the importance of government policies that promote economic development and reduce costs for manufacturers.
He urged policymakers to prioritise empathy for the manufacturing sector and address challenges such as infrastructure provision and trade-related issues.
On his part, Matthew Gbojubola, the Coordinating Director of the Federal Inland Revenue Service, reassured stakeholders that efforts were underway to simplify tax laws to ensure easy compliance.
”Government is committed to creating a better operating environment while leveraging tax revenues for economic growth,” he stated.
Recall that MAN recently released a concerning report indicating challenges within the manufacturing sector.
According to MAN, in 2023, approximately 767 manufacturing companies closed operations, and 335 faced distress, leading to an inventory of unsold goods valued at about N350 billion.
The report attributes the difficulties to various economic factors, including exchange rate volatility, rising inflation, and a deteriorating investment climate.