The Chairman of the Federal Inland Revenue Service (FIRS) Zacch Adedeji said manufacturing companies in Nigeria lost about N1.7tn as a result of naira depreciation in 2023, not tax fines.
Adedeji, disclosed this in Abuja during an interactive session with the Senate Committee on Finance at the National Assembly Complex.
Recall in 2023, Nigeria recorded at least ten exodus of multinational companies. These companies either scaled down operations, transferred ownership or sold their stake.
Some of the companies are Unilever Nigeria PLC; Procter & Gamble Nigeria; GlaxoSmithKline Consumer Nigeria Ltd; ShopRite Nigeria; Sanofi-Aventis Nigeria Ltd; Equinox Nigeria and Bolt Food & Jumia Food Nigeria.
NewsNGR also reported that 767 manufacturers shut down operations while 335 became distressed in 2023 over economic reforms.
Speaking about the negative effect of the company’s exodus, Adedeji said the losses have made the country lose hugely in terms of tax collection.
“I don’t know anybody that followed in the last year, all manufacturing entity in Nigeria, they declared a total of N1.7tn losses just as a result of forex and we are saying that okay, one sector of the economy had declared N1.7tn 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.
“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 ineptitude”.
Speaking further Adedeji said if the government did not enforce tax, foreign investors might lose confidence in the government.
He said, “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 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.”