Manufacturers pay N74.5bn tax as reforms offer relief

Manufacturers paid N74.48bn in Company Income Tax in the first quarter of 2026 as the Federal Government and the organised private sector seek to balance increased tax compliance with stronger protection for businesses under the new tax regime.

Saturday PUNCH found that N74.48bn paid by manufacturers accounted for 13.82 per cent of the N538.91bn total local Company Income Tax collected during the period, according to data from the National Bureau of Statistics.

However, the sector’s tax remittance fell by 30.98 per cent year-on-year from N107.90bn in Q1 2025, highlighting the changing tax landscape as the four new tax laws introduced a simplified framework for businesses from January 1, 2026.

The Federal Government and the Manufacturers Association of Nigeria agree that the reforms should ensure that manufacturers meet their tax obligations without facing the multiple assessments, levies and administrative costs that previously burdened the productive sector.

Following a recent presentation to manufacturers, the Executive Secretary of the Joint Revenue Board, Olusegun Adesokan, said the new tax framework fundamentally changed manufacturers’ position within the tax system.

“The new law reframes the Nigerian manufacturer from an endlessly assessed target to a protected taxpayer. The law provides stronger safeguards than ever before. Our shared responsibility is to ensure these safeguards are consistently applied across every level of government,” Adesokan said.

He urged manufacturers to hold valid Tax Identification Numbers, maintain accurate records, file employees’ returns on time, pay undisputed assessments and raise valid objections where necessary.

Adesokan also urged manufacturers to comply with the Model Taxes and Levies Law, reject cash transactions for tax payments and use available dispute-resolution channels.

“The success of tax reform will ultimately be measured not by the taxes we impose, but by the businesses we enable to grow, the jobs we enable to create, and the prosperity we enable to share,” he said.

Under the new framework, the government has consolidated more than 100 taxes and levies into nine revenue heads at the sub-national level. They include income tax, stamp duty, property tax, road tax, haulage levy, economic development levy, harmonised levy, user charge and daily tickets.

The new Tax ID system also consolidates the taxpayer identification systems previously operated by the Joint Tax Board, the Federal Inland Revenue Service and state tax authorities. At the same time, the tier of government will have one recognised revenue administration authority.

The reforms prohibit the collection of taxes through roadblocks along transportation corridors and ban cash payments for taxes. They also prohibit associations, unions and other non-state actors from collecting taxes on behalf of the government.

The framework prescribes penalties of up to N5m, three years’ imprisonment or both for mounting revenue-collection roadblocks, while violations involving prohibited cash tax collection attract penalties of up to N2m, three years’ imprisonment or both.

The reforms also introduce a tax refund mechanism to enable taxpayers to recover tax overpayments and establish a centralised framework for haulage levy payments at designated loading and offloading points.

The Office of the Tax Ombud will review complaints against tax officials and authorities, mediate disputes, institute legal proceedings on behalf of taxpayers and escalate cases of non-compliance to the National Assembly or state Houses of Assembly.

Meanwhile, Director-General, Manufacturers Association of Nigeria, Segun Ajayi-Kadir, concurred that the tax contribution by manufacturers must be viewed alongside the need to create a tax system that supports production and investment.

He said the four new tax laws had created an opportunity to reposition taxation as a strategic tool for growing the productive sector.

“In more recent times, the issue of tax has generated a lot of attention, both from the government and the private sector. And the four new tax laws that took effect from 1st of January 2026 have so far been a bigger platform for engaging and for deciding whether tax should support productivity or it should continue to burden the productive sector,” Ajayi-Kadir said.

He said manufacturers previously paid between 120 and 160 taxes and levies, which increased operating costs and created uncertainty for businesses.

“It is evident that before now, we paid anywhere between 120 and 160 new taxes and levies. And for a manufacturer, that can be a lot. It’s too much, and it has actually affected the bottom line, wasted our time and created uncertainty,” he said.

Ajayi-Kadir said limiting the number of taxes and levies to nine would make compliance easier and give manufacturers greater certainty.

“But under the new tax law, we are to pay not more than nine taxes. And from even what we had in the lecture, we are having 16 states out of the 36 states of the federation have subscribed to this federal tax law by domesticating it and limiting the number of taxes and levies that will be collected to nine, which will make it a lot easier for us to comply with and create some measure of certainty even from the beginning of the year to the end of it,” he said.

He said manufacturers wanted a tax regime that would make payment easier, encourage productivity and provide effective mechanisms for challenging disputed assessments.

“At the end of the event, we want a situation where members have more clarity, that we establish a symbiotic relationship between the joint revenue board and the manufacturers, particularly the productive sector of the economy, and that’s where manufacturing leads,” Ajayi-Kadir said.

He added that manufacturers wanted the government to protect compliant businesses while ensuring that the tax system did not undermine production.

“We want manufacturers and the government to be on the same page, having a supportive tax regime, one that intentionally incentivises productivity and does not reward bad people. So we are law-abiding, we pay our taxes, we should be able to see a tax regime that works for manufacturers, such that when we pay our taxes, we pay it easily, it’s not complex, and no one is sabotaging the process of payment so that they can benefit from it,” he said.

The MAN DG said the Tax Ombud would provide manufacturers with a formal avenue for resolving disputes over assessments and other tax-related grievances.

“And we have a recourse in the tax ombudsman where we can address our grievances, our disagreements, and we’ll be sure to have a dispassionate settlement,” he said.(Punch)