(MAN) warns that the proliferation of taxes jeopardizes the benefits for manufacturers under the Afr
The Manufacturers Association of Nigeria (MAN) has cautioned that the proliferation of taxes on the manufacturing sector in the country could impede its ability to fully leverage the potential benefits of the African Continental Free Trade Area (AfCFTA).
Segun Ajayi-Kadir, Director General of MAN, expressed this concern in a paper presented at the recently concluded annual tax conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja. Meanwhile, Muda Yusuf, Chief Executive Officer at the Centre for the Promotion of Private Enterprise (CPPE), highlighted that many manufacturing investors are now shifting to the services sector due to the high operating costs.
Taxes levied by federal, state, and local governments have a significant impact on manufacturing, hindering its development and competitiveness. Ajayi-Kadir emphasized that the imposition of overlapping taxes has led to compliance burdens, operational inefficiencies, and reduced profitability for manufacturers. He noted that a survey conducted by MAN in 2023 revealed numerous taxes with overlapping effects, adding complexity and burden to businesses.
Sales tax, Value Added Tax (VAT), mobile advertising charges, education levies, tenement rates, land use charges, and parking fees contribute to the financial burdens faced by manufacturers. The multitude of taxes discourages investment, stifles entrepreneurship, and hampers economic growth, disproportionately affecting small and medium industries (SMIs).
Ajayi-Kadir warned that the competitiveness of Nigerian manufacturers in the global trading environment has declined due to the burden of multiple taxes. He stressed that this tax burden could hinder the sector's ability to fully capitalize on the potential gains in the AfCFTA.
Similarly, Muda Yusuf reiterated at the CITN conference that manufacturers in Nigeria are burdened with high operational costs, including energy costs, logistics challenges, supply chain issues, forex volatility, and customs duties. He highlighted that manufacturers often have to provide amenities such as roads, security, water, and electricity, which should ideally be provided by state governments.
Yusuf underscored the need for empathy towards the manufacturing sector, noting that many investors are now migrating to the services sector due to the more favorable operating environment. He emphasized the importance of addressing these challenges to ensure the growth and competitiveness of the manufacturing sector in Nigeria.
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