The Manufacturers Association of Nigeria (MAN) has strongly opposed the recent levies imposed on private enterprises by the Financial Reporting Council of Nigeria (FRCN) under its amended FRCN Act. MAN’s Director General, Segun Ajayi-Kadir, described the levies as astronomical, arguing that they contradict the government’s ease of doing business agenda and jeopardize the survival of businesses in Nigeria.
Ajayi-Kadir raised concerns over the severe financial burden placed on companies, particularly Public Interest Entities (PIEs), which are now required to pay significant amounts in levies, regardless of whether they are profitable. He also criticized the harsh penalties attached to non-payment, which include a maximum six-month jail sentence for defaulting CEOs.
MAN Condemns Heavy Tax Burden on Businesses
The FRCN Amendment Act introduces new annual charges calculated as a percentage of companies’ annual turnover.
According to Section 33 of the FRCN Act (2023):
- Companies with a turnover of over N10 billion annually are required to pay 0.05% of their annual turnover in levies.
- Publicly quoted companies, which previously had a maximum levy of N1 million per annum, will now pay up to N25 million annually.
- The levies are mandatory, regardless of a company’s profitability, raising concerns about their sustainability and impact on struggling businesses.
Ajayi-Kadir warned that these sudden and excessive financial obligations could drive companies out of business, discourage investments, and worsen Nigeria’s economic challenges.
The criminalization of non-payment is another major issue raised by MAN. Ajayi-Kadir stated that failure to pay regulatory fees should attract fines or other civil penalties, rather than imprisonment.
“The strict penalties and possible conviction to imprisonment could be construed as having the nature of criminal law. Generally, non-payment of fees typically results in penalties or fines. Imprisonment should only apply in cases of fraud or willful defiance,” he emphasized.
He further noted that the timing of the new charges is poor, given Nigeria’s current economic struggles. Imposing additional levies on manufacturers and businesses could discourage investment and hinder economic recovery.
MAN is urging the FRCN to halt the implementation of these levies and reassess their impact on businesses. The association called for a realignment of the FRCN’s policies with Nigeria’s ongoing tax reform initiatives, which focus on simplifying taxes, reducing regulatory burdens, and fostering corporate growth.
“MAN therefore implores the FRCN to be mindful of the negative impact of its continued administration of these fees on businesses and put it on hold. As the umbrella body for manufacturers in Nigeria, we urge the FRCN to await the enactment of the tax reform laws and realign its operations accordingly,” Ajayi-Kadir stated in a release made available to 9am News Nigeria.
With growing resistance from stakeholders in the manufacturing and business sectors, the pressure is now on the FRCN and the federal government to reconsider the implementation of these levies. Whether the government will listen to the concerns of manufacturers and business owners remains to be seen.
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