Yemisi Izuora
The Manufacturers Association of Nigeria (MAN), has expressed concern about an imminent distraction from a possible introduction of a Tax Stamp System for excisable goods.
The MAN says it 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
The Association however appreciated Government’s efforts to harmonize and modernize tax administration, and promote greater accountability within Nigeria’s tax system through the enactment of the Nigeria Tax Act 2025.
The Association said it members have widely welcomed the Laws as they provide a simplified tax framework, harmonize the tax regime and deliver relief to industries, particularly the small and medium-sized industries (SMIs).
“As we stated in 2018 when the Tax Stamp was initially suggested to Government and was roundly rejected, this fleeting proposition is typically the refrain of vendors who propose tax stamps as a measure against illicit trade. While the efficacy of this measure is yet to be validated, findings indicate that tax stamps portend significant adverse implications without tangible benefits.
“However, as a critical stakeholder, MAN notes with concern 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.
A brief highlight of some of the concerns of the manufacturers is the contradiction with the Nigeria Tax Act 2025: The Tax Act 2025 consolidated and rationalized taxes, providing businesses, especially SMIs, with relief from multiple levies. 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.
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.
The MAN also fears that the move poses risk of upsurge in illicit trade: Ultimately, the high logistical costs and risks associated with tax stamps primarily benefit the vendor, not the government or the industry. There is a tendency that the Nigerian market risks an upsurge in illicit trade, which will erode government revenue, harm legitimate businesses, and jeopardize consumer safety.
IN addition its warned that it will increase costs passed to consumers as producers and importers may raise prices to recover compliance costs, further straining consumers and potentially driving them toward cheaper, illicit
The MAN 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), digitizing 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 Government the visibility that tax stamps claim to provide without adding redundant layers.
It also fears that it could pose risk to industry competitiveness:
“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
The Association added that 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.
“International studies show that while stamp systems can increase reported excise revenue, the compliance costs (borne by manufacturers) often exceed the marginal revenue gains. In particular, a 2020 academic study from the University of Cape Coast found that compliance costs significantly affect small taxpayers’ profitability and tax compliance in Ghana
“Increased circulation of counterfeit goods: Paper-based tax stamps, in particular, are prone to falsification, making it extremely difficult for consumers and retailers to distinguish between genuine and counterfeit products. In the same vein, our experience in other markets equally shows that digital stamps are counterproductive, cutting productivity by up to 40%, 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”. MAN said.
Beyond effectiveness concerns, it is a case that the implementation of tax stamps comes with significant economic and operational burdens and added costs could force producers and distributors to cut jobs across the value chain, is argued.
The Association also warned that higher operating costs would limit reinvestment, stifle innovation, and discourage
The MAN therefore 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 Government should strengthen existing digital fiscal tools and border controls to achieve compliance without imposing undue