MAN Warns Against Proposed Tax Stamp System for Excisable Products

The Manufacturers Association of Nigeria (MAN) has cautioned the Federal Government against imminent distraction in the form of a possible introduction of a Tax Stamp System for excisable goods, warning that such a move could undermine the gains of the recently enacted Nigeria Tax Act 2025.

The association, in a statement issued by its Director General, Segun Ajayi-Kadir, mni, appreciates 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.

“Our members 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),” he said.

He explained that the proposal is being pursued under the guise of curbing smuggling, counterfeiting, and enhancing transparency and traceability in the excise regime, and supporting revenue growth, but global data indicates that the system often comes with heavy compliance costs, operational bottlenecks, and limited impact on illicit trade.

The body stated that in 2018, when the idea was first proposed, it was rejected after stakeholders highlighted its flaws and the absence of any proven benefits. It described the renewed push as vendor-driven and disconnected from Nigeria’s current realities.

MAN argued that the system contradicts the Nigeria Tax Act 2025, undermining the relief granted under the 2025 Tax Act as SMIs, in particular, would bear disproportionate burdens, thereby weakening the Federal Government’s drive to promote local manufacturing and job creation.

“Such a measure is tantamount to “giving with one hand and taking back with the other,” it added.

It emphasized that there would be a risk of upsurge in illicit trade, while the high logistical costs and risks associated with tax stamps primarily benefit the vendor, not the government or the industry as it will erode government revenue, harm legitimate businesses, and jeopardize consumer safety.

It added, “producers and importers may raise prices to recover compliance costs, further straining consumers and potentially driving them toward cheaper, illicit alternatives.

MAN stated that the government has already invested in home-grown digital systems that can deliver full visibility of excise operations, such as the Nigeria Customs Service launched B’Odogwu Automated Excise Register System (ERS), digitizing excise tracking and providing real-time visibility, while the Federal Inland Revenue Service (FIRS) has also implemented e-invoicing, which captures production and sales data.

These tools, it said, have already given the Government the visibility that tax stamps claim to provide without adding redundant layers.

The association warned that Nigerian manufacturers compete with imported brands within AfCFTA and beyond, so introducing additional costs in the form of tax stamp will increase production costs and render locally made products less competitive in regional markets.

According to the association, the implementation of a tax stamp system will inevitably raise production costs and discourage local patronage, adding that while 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.

The group cited some international studies and African experiences and the drawbacks of such systems, noting that in Kenya, Uganda, Tanzania, and Ghana, tax stamp programs raised compliance costs, ignited litigation, and reduced productivity, among others.

So, in all cases, it stated that 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.

It stressed that beyond effectiveness concerns, it is a case that 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; while higher operating costs would limit reinvestment, stifle innovation, and discourage new market entrants.

Beyond Africa, the United Kingdom recently reformed its own tax stamp regime, citing inefficiency and high costs, while in the Gulf States, success depended largely on heavy government subsidies and advanced border enforcement — conditions not available in Nigeria.

It pointed that United Kingdom: the UK recently reformed its tax stamp regime, recognizing it as outdated, costly, ineffective, and confusing for businesses, adding that the reform highlights how legacy stamp-based systems can become bureaucratic burdens that stifle efficiency and investment, offering a clear warning to countries like Nigeria considering a similar excise stamp framework.

In view of these challenges, MAN reiterates its members’ commitment to excise contributions, while firmly maintaining its position on deliberate private–public sector efforts to co-create a conducive operating environment for industries to thrive.

The association urged the Federal Government to instead strengthen existing excise monitoring systems, intensify border controls, and adopt risk-based audits as more effective alternatives.

It further called for transparent stakeholder engagement and a comprehensive impact assessment before any decision is made, stressing that Nigeria must avoid policies that could cripple industries already facing high inflation, energy costs, and supply challenges.

“Is worried that a tax stamp policy is coming at a time when industrial operators are already grappling with rising excise rates, high energy prices, inadequate energy supply, and high inflation, making the additional burden of implementing tax stamps a serious threat to industrial sustainability.

“Call 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.

“Rely 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.

“Urge 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 emphasized.

In conclusion, MAN urged the Federal Government to exercise caution and resist the pressure in introducing a Tax Stamp System in Nigeria, noting that 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 burdens on industry,” DG MAN emphasized.