The Federal Inland Revenue Service (FIRS) has revealed that manufacturing companies in Nigeria incurred losses amounting to N1.7 trillion last year due to foreign exchange challenges, leading many to cease operations.
At an interactive session with the Senate Committee on Finance at the National Assembly Complex in Abuja on Monday, FIRS Chairman Zacch Adedeji highlighted the impact of the forex crunch on the manufacturing sector.
“I don’t know anybody that followed in the last one year, all manufacturing entities in Nigeria declared a total of N1.7 trillion losses just as a result of forex. We are saying that okay, one sector of the economy had declared N1.7 trillion losses, and ask me how does that concern the government.
“It concerns the government because by our law, we will not be able to collect any taxes from them until they recover all those losses, till next 10 years, five years. Even when they make a profit next year, they will tell you they have losses they are carrying forward,” Adedeji was quoted as explaining by Premium Times.
Foreign companies, particularly manufacturers and energy firms, have been exiting Nigeria since President Bola Tinubu took office.
The primary reasons cited include foreign exchange difficulties and the naira’s devaluation.
Other factors mentioned were insecurity and low revenue.
Notable companies that have ceased operations in Nigeria include GlaxoSmithKline (GSK), Procter & Gamble (P&G), Sanofi, and Norwegian oil firm Equinor.
Adedeji noted the significant impact these exits have had on the country’s tax revenue.
“So, it is not that we are going after the profit, it is that we are recovering the losses that we have from the other side of the economy. So I want us to look at it from that perspective. It is not only that we are focusing on the bank, manufacturing which by law should pay us taxes because of the activities that are as a result of their own ineptitude,” he said.
The FIRS chairman stressed the importance of tax enforcement to maintain economic stability and investor confidence.
“When you talk about the real feature of taxes, does it help in standby? Yes. It is when we don’t do it that people think as a country we don’t know what we are doing. If that is not done, that is when the real investor will run away from Nigeria because this is a way to balance the economic indices and this is what shows that we actually know what we are doing, and we have a plan for where we are going.”
“As a responsible government that we are, this is what we should do. I don’t think there is anything that will make investors lose confidence in what we are doing,” Adedeji concluded.
