Manufacturing companies in Nigeria lost N1.7trn in one year – FIRS chairman

The Federal Inland Revenue Service (FIRS) has said all manufacturing companies in the country lost about N1.7 trillion last year as a result of the forex exchange crunch which forced many of them to discontinue operations.

Chairman of the FIRS, Zacch Adedeji, disclosed this on Monday during an interactive session with the Senate Committee on Finance at the National Assembly Complex, Abuja.

“I don’t know anybody that followed in the last one year, all manufacturing entity in Nigeria, they declared a total of N1.7 trillion losses just as a result of forex and we are saying that okay, one sector of the economy had declared N1.7 trillion losses and ask me how does that concerns 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,” he said.

Foreign companies, especially manufacturers and energy firms have been leaving the country since the advent of the President Bola Tinubu administration.

Most of them cited the foreign exchange challenges and devaluation of the naira as the reasons for leaving. Some of the companies also cited insecurity and low revenue as other reasons.

Among the manufacturing companies that have discontinued operations in Nigeria are GlaxoSmithKline (GSK), Procter & Gamble (P&G), Sanofi, a French multinational pharmaceutical company and Equinor, a Norwegian oil firm.

Mr Adedeji noted that the losses and exits of the companies have made the country lose hugely in terms of collection of taxes.

“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”.

Why Nigerian govt needs tax

Mr Adedeji explained that the federal government needs taxes to balance the economic indices.

He said if the government did not enforce tax, foreign investors might lose confidence in the government.

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“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 economy 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,” the FIRS chairman said.