Manufacturers raise alarm as FG pushes ahead with tax stamp plan

Stakeholders in the manufacturing sector have expressed deep concerns over the decision of the federal government to proceed with its planned tax stamp system on excisable products despite its potential negative impacts on the industry.

Industry sources, who spoke with Nairametrics, said the project, which is also referred to as track and trace systems, could undermine the fragile recovery recorded in the industry as it places an additional financial burden directly on manufacturers and indirectly on Nigerian consumers.

Tax stamp system is a regulatory mechanism where governments require a physical, high-security label or digital code to be affixed to excise goods such as alcohol, tobacco, and sugary drinks to prove that taxes have been paid.

MoreStories

Most funded alternative energy startups in Africa in 2025

February 27, 2026

JAMB debunks increase in 2026 UTME fees claims, lists approved charges

February 27, 2026

Although the government has not officially announced the date of the project commencement, the Comptroller-General of Customs, Adewale Adeniyi, was said to have met with stakeholders recently to intimate them with the plans.

At the meeting, the CG introduced the vendor selected for the project, an American-based company, Authentix, Inc.

What they are saying

While acknowledging that the government may have come up with the initiative to curb illicit trade, improve transparency in the excise regime, and boost revenue, they said the system comes with its operational challenges and financial risks to manufacturers.

• _“This proposal is coming at a time when operators are already grappling with rising excise rates, foreign exchange volatility, and high inflation. An additional burden of implementing tax stamps is a serious threat to business sustainability,” _said one of the sources who spoke under the condition of anonymity.

Another who was at the meeting with the Customs said the industry is also concerned that the model promoted by Authentix, Inc. is a hybrid tax stamp system.

• “The core flaw in the government’s plan is its reliance on hybrid (paper-digital) based tax stamps. In today’s digital world, where advanced, real-time supply chain monitoring is the standard, any systems that are not fully digital are inherently deficient,” he said.

He noted that the federal government has already invested in digital systems that deliver full visibility of excise operations.

According to him, the Nigeria Customs Service recently launched and piloted the B’Odogwu automated Excise Reporting System (ERS), a modern platform that digitizes excise administration.

He urged the government to sustain existing home-grown digital systems that deliver full visibility of excise operations rather than embarking tax stamp system that leverages foreign technology.

**Get up to speed **

Before now, industry stakeholders have voiced their opposition to the proposed tax tamp system, citing its potential implications on the industry.

In a position paper sent to the government September last year, when the proposed project first became public knowledge, the Manufacturers Association of Nigeria (MAN) said the tax stamp system contradicts the Nigeria Tax Act 2025.

• _“The Tax Act 2025 consolidated and rationalised 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,” _MAN stated in the position paper signed by its Director-General, Segun Ajayi-Kadir.

MAN also warned that 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 jeopardise consumer safety,” it added.

In January this year, Consulting Firm, PwC, also issued a position paper to the government on the project.

In the position paper, a copy of which was seen by Nairametrics, PwC noted that with the proposed introduction of e-invoicing by the FIRS and the B’Odogwu portal by the Nigeria Customs Service, the industry is already subjected to multiple taxation and compliance checks.

• “The proposed tax stamps and track-and-trace system would impose significant operational and financial pressures on industry players, driving up costs, eroding profitability, and ultimately diminishing government tax revenues,” it warned

The organization added that regulated companies might explore passing the incremental cost to consumers, resulting in higher prices of regulated products. This, it said, would result in a shift in market demand towards cheaper and illicit alternatives.

**What you should know **

Last year, the Infrastructure Concession Regulatory Commission (ICRC) had faced strong criticism for its issuance of “No Objection” certificate to a Swiss-based company, Société Industrielle et Commerciale de Produits Alimentaires, SICPA, as the sole company for the deployment of the track and trace system in Nigeria.

The recent introduction of US-based Authentix, Inc. suggested the government had made a U-turn from the previous decision to use SICPA.

Authentix is a specializes Track and Trace systems with a long-standing history in Africa. The company managed Ghana’s tax stamp program, which was also controversial among local manufacturers due to its high cost.

Add Nairametrics on Google News

Follow us for Breaking News and Market Intelligence.