Manufacturing firms in Nigeria experienced a significant financial loss of 1.7 trillion Naira over a one-year period, as reported by the Chairman of the Federal Inland Revenue Service (FIRS).

The Federal Inland Revenue Service (FIRS) reported that manufacturing companies in the country experienced significant financial losses amounting to approximately N1.7 trillion in the preceding year. This was primarily attributed to the foreign exchange crisis, which compelled numerous companies to cease operations.

During an interactive session with the Senate Committee on Finance held at the National Assembly Complex in Abuja on Monday, FIRS Chairman Zacch Adedeji disclosed this information.

“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.

International corporations, particularly those in manufacturing and energy sectors, have been departing the nation following the commencement of President Bola Tinubu's administration. The primary reasons cited for their exit include foreign exchange difficulties, naira devaluation, insecurity, and low revenue.

Notable manufacturing companies that have ceased operations in Nigeria include GlaxoSmithKline (GSK), Procter & Gamble (P&G), Sanofi, a French multinational pharmaceutical company, and Equinor, a Norwegian oil company.

Mr. Adedeji observed that the closures and departures of these businesses have resulted in significant revenue losses for the nation in terms of tax collection.

“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”.

Mr. Adedeji elucidated the significance of taxation for the federal government in achieving economic equilibrium. He emphasized that the absence of a robust tax enforcement mechanism could erode the trust of foreign investors in the government’s financial management capabilities.

“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, we should proceed as follows. I believe our actions will inspire confidence among investors,” the FIRS chairman said.