Manufacturers want tax relief in response to declining sales.

 

Manufacturers in Nigeria are increasingly calling on the government to grant tax relief as they struggle with dwindling sales and increased manufacturing expenses. 

The Manufacturers Association of Nigeria (MAN) has expressed concern about the need for prompt action to ease the financial burden on manufacturers, who are now confronting a slew of issues aggravated by economic circumstances.

The Nigerian industrial industry has been under intense pressure in recent months. Many manufacturers' sales have declined due to high inflation, foreign currency instability, and rising energy prices. 

According to MAN's Director-General, Segun Ajayi-Kadir, the value of unsold completed products inventory increased by 42.93% in the first half of 2024, hitting N1.24 trillion from N869.37 billion in 2023. 

This disturbing trend emphasizes the critical necessity for government involvement.Ajayi-Kadir underlined that manufacturers are now saddled with 60 to 120 different levies imposed by various levels of government. 

He went on: "If that is reduced to below 10, it will be a huge relief for us." This remark emphasizes the huge tax burden that manufacturers endure, which limits their capacity to operate efficiently and stay competitive.

In response to these worries, the government has lately implemented a number of tax relief measures targeted at boosting the manufacturing sector. 

One notable improvement is the exemption of firms with a turnover of less than N50 million from withholding taxes. 

The effort is seen as a critical step in easing the financial burden on small and medium-sized businesses (SMEs), which are an important element of Nigeria's economy.

Ajayi-Kadir praised this development as a significant step for small businesses, noting that it will aid manufacturers while also contributing to overall economic growth. 

He said that these revisions are consistent with the recommendations of the Presidential Committee on Fiscal Policy and Tax Reform, which seeks to simplify Nigeria's complicated tax structure.

The Nigerian government has implemented a number of tax breaks to encourage investment in critical industries, including manufacturing. These incentives may be roughly classified as profit-based and cost-based incentives:

Profit-based incentives include tax breaks for pioneer enterprises in specified industries for up to three years, with the possibility of extension depending on success.

Cost-based incentives, such as investment allowances and tax deductions, help firms reduce manufacturing costs.

According to Elizabeth Olaghere from KPMG, these incentives are critical instruments for attracting new investments and expanding current operations in the manufacturing sector. To maximize the advantages of these initiatives, she urged stakeholders to actively participate in them.

Despite these attempts, many firms are wary about their efficacy owing to persistent economic concerns. High power bills and shifting foreign currency rates continue to have a substantial influence on manufacturing costs. 

Ajayi-Kadir emphasized that these macroeconomic variables are exacerbating manufacturers' problems, necessitating further government assistance.

Furthermore, manufacturers have highlighted worries about the lack of transparency in how tax breaks are implemented. 

Ajayi-Kadir advocated for a more systematic approach to spreading these incentives throughout the industry, stressing that they should be administered sustainably and without abrupt interruptions.

Government assistance is critical in assisting manufacturing through these tough times. The recent acceptance of tax relief measures is a positive beginning; nonetheless, more comprehensive policies are required to safeguard the industrial sector's long-term survival.

Ajayi-Kadir advised manufacturers to actively support the execution of fiscal policy committee recommendations and collaborate with government authorities to improve the business climate. He added that lowering the tax burden on companies is critical not just for their survival, but also for promoting economic development and employment.

As Nigeria continues to face economic woes, the future of its industrial industry is uncertain. The plea for tax relief underlines a larger need for fundamental reform in the sector. Manufacturers believe that continued negotiations with government authorities would result in more comprehensive policies that address their concerns.

The latest revisions are seen as a significant move; nevertheless, further work will be necessary to ensure that they translate into concrete advantages for manufacturers on the ground. Industry stakeholders are urged to continue engaging with legislators in order to lobby for required reforms that would improve their operations.

Nigerian manufacturers' plea for tax relief comes at a crucial moment for the industry, which is experiencing dwindling sales and increasing manufacturing costs. 

While recent government measures provide some promise, remaining difficulties need continued action and coordination between industry and authorities.

As Nigeria strives to reinvigorate its manufacturing sector, both sides must collaborate to establish an atmosphere favorable to development and innovation. 

By eliminating tax burdens and encouraging investment via appropriate incentives, Nigeria can pave the road for a more robust industrial sector capable of surviving future economic storms.