The Manufacturers Association of Nigeria (MAN) has warned that the proposed introduction of a Tax Stamp System for excisable goods could worsen inflation, erode consumer demand, and weaken Nigeria’s competitiveness under the African Continental Free Trade Area (AfCFTA).
According to the association, the extra compliance costs from tax stamps would inevitably be passed on to consumers, many of whom are already grappling with high prices for basic goods.
“This will further shrink demand and push more people toward cheaper, illicit alternatives,” MAN said in a statement signed by its Director General, Segun Ajayi-Kadir, on Tuesday.
The group added that the measure would raise production costs for local manufacturers, making their products less competitive compared to imports from other African countries.
Gains of the 2025 Tax Act at risk
MAN acknowledged the government’s efforts to modernize tax administration through the Nigeria Tax Act 2025, which consolidated multiple levies, simplified compliance, and delivered relief to businesses. But it warned that the proposed tax stamp would undermine those gains by creating a “hidden tax burden” that contradicts the spirit of the Act.
“The 2025 reforms were meant to ease the cost of doing business and encourage investment. Introducing tax stamps risks reversing these achievements and discouraging industrial growth,” the statement said.
- The manufacturers also questioned the effectiveness of tax stamps in tackling smuggling and counterfeiting, which proponents often cite as key benefits.
- MAN argued that the evidence globally shows limited success, with the main beneficiaries being vendors supplying the tax stamp technology rather than governments or industries.
- Instead, the association warned, tax stamps could worsen illicit trade as higher prices drive consumers toward unregulated markets. It also flagged risks of counterfeit stamps entering circulation, making it harder to distinguish between genuine and fake products.
Digital systems already in place
MAN further pointed out that the government already operates digital platforms capable of providing transparency and traceability in excise operations.
These include the Nigeria Customs Service’s B’Odogwu Automated Excise Register System (ERS) and the Federal Inland Revenue Service’s e-invoicing platform.
“These home-grown systems give government the real-time visibility that tax stamps promise, without the additional costs and disruptions,” the group said.
It warned that layering a new system on top of existing ones would only create bottlenecks and increase compliance costs.
Lessons from other countries
The association cited the experiences of Kenya, Uganda, Tanzania, and Ghana, where tax stamp systems triggered legal disputes, high compliance costs, and widespread industry complaints. In many of these cases, illicit trade persisted despite the additional costs to manufacturers.
- Even in advanced economies, the association noted, tax stamp regimes are being reconsidered. The United Kingdom recently reformed its stamp-based system after concluding it was costly, ineffective, and confusing for businesses, a development MAN says Nigeria should take seriously.
- While reiterating its commitment to contributing excise revenues, MAN urged the government to strengthen existing digital tools, border controls, and enforcement mechanisms instead of introducing tax stamps.
It also called for broad stakeholder consultations and a transparent impact assessment before any final decision is made.
Backstory
While there is no official announcement of the tax stamps yet, MAN said it has it on good authority that the government is planning to introduce the policy based on the suggestions of some vendors that it would help to tackle illicit trade.
The Association noted that the Tax Stamp was first considered by the Nigerian government in 2018, and it was roundly rejected by all stakeholders.
