The Federal Government, through the Presidential Committee on Fiscal Policy and Tax Reforms, has outlined a series of new tax incentives designed to strengthen Nigeria’s manufacturing sector and reduce the burden of multiple taxation.
Speaking at a stakeholders’ engagement with the Manufacturers Association of Nigeria (MAN), themed “From Legislative Assembly to Factory Floor: What the New Tax Laws Mean for Nigerian Manufacturers,” the Committee’s Chairman, Taiwo Oyedele, said the reforms were crafted to make Nigeria’s tax system simpler, fairer, and more supportive of productive enterprises.
Oyedele acknowledged that under the previous regime, manufacturers faced multiple levies, excessive tax burdens, and compliance challenges that made local production uncompetitive.
“Today, you can manufacture in Nigeria and imported alternatives will still land cheaper, even after freight and duties,” he lamented. “We want our businesses to compete locally and across Africa, especially under the AfCFTA. Otherwise, investors will keep setting up in neighboring countries like Ghana or Benin and exporting back to Nigeria.”
He described the old tax structure as one that “taxed capital and investments,” noting that manufacturers bore one of the world’s highest effective tax rates due to legal and illegal collections by various agencies.
“The system was distorted — taxing poverty and overburdening producers. These reforms aim to correct that,” he said.
The new tax framework, Oyedele explained, provides several benefits for manufacturers, including:
- Expanded input VAT claims on assets and services.
- Revised income bands and higher exemption thresholds.
- Reliefs and allowances to reduce effective tax burdens.
- The creation of a Tax Ombudsman to resolve disputes and ensure fair treatment.
- Withholding tax exemptions for manufacturers and small businesses.
Additional incentives include zero-rated VAT (0%) on fertilizers, locally produced agricultural chemicals, veterinary medicines, and animal feeds. The Finance Minister may also suspend VAT on petroleum products, renewable energy equipment, and compressed or liquefied gas.
Oyedele added that input VAT on taxable supplies can be deducted from output VAT, provided it relates to taxable goods, while R&D expenditure up to 5% of annual turnover will now be tax-deductible.
In his remarks, MAN Director-General, Segun Ajayi-Kadir, commended the reforms, emphasizing that their success depends on cooperation from state governments.
“We’re encouraged that at least 10 states have passed laws aligning with the federal framework,” he said. “This alignment will help eliminate nuisance taxes and illegal collections that have long crippled manufacturers.”
Ajayi-Kadir added that the new structure offers hope for sustainable industrial growth and improved competitiveness for Nigerian manufacturers.
