Nigeria’s manufacturing sector has opened direct talks with the Presidential Committee on Fiscal Policy and Tax Reforms, seeking clarity on how newly enacted tax laws will affect factory operations, costs and long-term competitiveness.
The engagement, organised by the Manufacturers Association of Nigeria in Lagos, focused on bridging the gap between legislation and day-to-day industrial activity, as manufacturers across different subsectors raised concerns about implementation, compliance and the real impact on production.
The committee explained that the reforms were designed to make Nigeria’s tax system fairer, simpler and more competitive, particularly for productive sectors such as manufacturing. According to the committee, manufacturers stand to gain from expanded input VAT claims on assets and services, revised income bands, higher exemption thresholds, and a range of reliefs and allowances aimed at reducing effective tax burdens.
The reforms also introduce mechanisms such as a tax ombudsman and withholding tax exemptions targeted at manufacturers and small businesses, measures intended to ease compliance pressures and resolve disputes more efficiently. For smaller producers and MSMEs within manufacturing value chains, these changes could reduce cash flow constraints and improve business sustainability.
The committee further explained that the Economic Development Incentive Scheme under the reforms prioritises sectors closely linked to manufacturing growth, including agriculture and food processing, energy, mining, health-related production, textiles and utilities. Other areas covered include ICT, creative industries, chemicals, building materials, steel, transportation equipment, machinery and environmental services, reflecting the government’s push to strengthen local value addition.
On consumption taxes, the committee clarified that VAT exemptions now apply to locally manufactured sanitary towels, assistive devices and disability-related products, while zero-rated items include fertilisers, agricultural chemicals, veterinary medicines and animal feeds. It was also disclosed that VAT on petroleum products, renewable energy equipment, compressed natural gas and liquefied petroleum gas may be suspended through an order by the finance minister, a move manufacturers say could significantly reduce production and logistics costs.
Manufacturers were told that input VAT deductions would apply strictly to taxable supplies, with non-taxable portions remaining non-deductible. Research and development expenses are now deductible, though capped at five per cent of annual turnover, a provision expected to encourage innovation and process improvement within the sector.
Despite these assurances, manufacturers raised persistent concerns around multiple taxation, high overall tax burdens, VAT compliance difficulties, taxation of raw materials, subnational tax practices, the removal of certain income tax exemptions for exporters and inconsistencies across tax laws. These issues, industry players noted, continue to erode margins and weaken competitiveness, especially for smaller manufacturers.
Responding to these concerns, the committee acknowledged that multiple levies and what it described as “taxing poverty” have distorted the system in the past, stressing that the current reforms are intended to correct these distortions and create a more supportive environment for production. The government, it said, recognises manufacturing as a key driver of employment, exports and economic growth, and expects the reforms to deliver measurable positive outcomes for the sector.
Manufacturers were also advised to improve record-keeping and rely on accurate information to fully benefit from available claims and incentives under the new tax regime, as poor documentation could limit access to reliefs embedded in the reforms.
The leadership of the manufacturers’ association welcomed the open dialogue, noting that the willingness of industry players to clearly articulate their concerns was crucial to shaping policies that work in practice. The association pledged continued engagement with government authorities to ensure that tax reforms translate into real gains for manufacturers and support the long-term sustainability of Nigeria’s industrial base.
For manufacturers and MSMEs alike, the discussions signal a critical moment as Nigeria attempts to align fiscal policy with production realities, turning tax reform promises into tangible support on the factory floor.
