FG Bows To Stakeholders’ Outcry, Suspends Contentious FRC Levy

The Financial Reporting Council of Nigeria’s (FRC) revenue stream may have been closed for some time due to a temporary suspension of the implementation of Section 33(1)(c) of the FRCN Act, which stipulates the controversial levy that has faced widespread criticism from the private sector.

Section 33(1)(c) of the FRCN Act stipulates that quoted companies are to pay annual dues based on 0.002 per cent of their market capitalisation or N25 million, whichever is lower. This provision, which has no cap, has raised concerns among private sector players, who argue that it creates an unfair financial burden.

The decision announced by the Minister of Industry, Trade and Investment, Jumoke Oduwole, resulted from a Stakeholders’ Consultative Forum held on Wednesday in Abuja, where business leaders, industry groups, and regulators discussed the levy’s negative economic impact.

She also stated that a technical working group will be established to review the contentious provisions to align them with the views of the private sector stakeholders who had communicated with President Bola Tinubu regarding the provisions’ impact on their businesses.

“The President has clarified that we must listen to the people, and in line with that directive, and given that the Act has been passed into law by the National Assembly, we cannot suspend the implementation.

However, we ask that the FRCN pause the implementation and undertake this robust review”.
“We will work with key critical stakeholders, escalate the review and take the outcome of the process further. We will also engage the National Assembly and the chairman of the committees who are paying attention to this conversation right now”.

The FRCN levy was introduced as part of the council’s expanded mandate under the 2023 amendment of the FRC Act. The levy applies to businesses classified as Public Interest Entities (PIEs), and is intended to fund regulatory oversight on financial reporting, corporate governance, and valuation standards. However, stakeholders argue that the fee structure is disproportionately high, particularly for private companies, and harmful to business sustainability.

The Executive Secretary of the Financial Reporting Council of Nigeria (FRCN), Rabiu Olowo, who stated that the amended act predates his assumption of office, explained the crucial role in maintaining financial reporting and corporate governance standards.

“The FRCN was established in 1982 as a private sector initiative before it was formalised under the Nigerian Accounting Standards Board in 1992. The FRC Act of 2011 expanded our responsibilities to cover accounting, auditing, valuation, and public governance standards, and the 2023 amendment further strengthened our enforcement powers,” Olowo explained.

He further justified the stakeholders’ engagement, stating, “The purpose of this discussion is to foster transparency and ensure that all perspectives are considered in implementing this levy. Regulatory standards must evolve with economic realities, and our engagement with the private sector reflects our commitment to fairness.”

We have succeeded in delivering why we are here to hear from the people to reach the core purpose that we sell. We have listened as you have said. I have taken a lot of notes, which was something I was looking forward to doing here. I have gone a long way in sharing deeper insight into the regulatory affairs of financial reporting. So I have no immediate response other than to digest what has been said, and we go back and look at all that has been said in a definitive stance.  I believe everything we do will be in the public interest, which is why we serve.

Adewale Smart Oyerinde, the Director-General of the Nigeria Employers’ Consultative Association (NECA), strongly criticised the new levy, warning that it could push businesses into financial distress.

“The average business owner in Nigeria pays over 80 different taxes, levies, and fees. The cumulative effect of these charges runs into billions of naira, significantly impacting business operations. This is why many companies are downsising, and the economy is suffering,” Oyerinde stated.

He argued that the new levy contradicts the government’s economic objectives and current realities, and benchmarks against global best practices. “The administration claims to promote economic growth, but this policy will do the opposite.

We need tax harmonisation, not additional burdens.”
Smart further highlighted how excessive taxation has led to capital flight and job losses. “We have seen multinational companies like GSK exit Nigeria, and many others are considering relocating their headquarters to friendlier business environments. If we don’t fix this, more businesses will follow,” he cautioned.

A representative of the Association of Telecommunications Companies of Nigeria (ATCOM), Dr Niniola, echoed similar concerns, demanding an immediate suspension of the new FRCN fee structure.

“We are urging the immediate suspension of this new annual due structure for private companies and a reversion to the previous N1 million annual fee pending broader stakeholder consultation,” she stated.

She argued that the levy should be based on profit, not gross revenue. “A company with a turnover of N200 billion may only declare N50 million in profit, yet the new levy requires payments based on gross revenue. This is unfair and unsustainable,” she explained.

The president of the Manufacturers Association of Nigeria (MAN), Francis Mesioye, expressed grave concerns about the impact of the levy on local industries.

“If I make N50 million in profit, but my turnover is much higher, I will be operating at a loss. This levy will force businesses to shut down or relocate,” Francis warned.

He emphasised that the government’s taxation policies are becoming hostile to businesses. “We are already seeing companies setting up headquarters outside Nigeria while keeping minimal operations here. This means we are losing revenue, jobs, and economic opportunities,” he added.