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By Merit Ibe
The Federal Inland Revenue Service (FIRS) has revealed that manufacturing companies in Nigeria lost approximately N1.7 trillion last year due to a severe foreign exchange crunch, forcing many to cease operations. This was disclosed by the FIRS Chairman, Zacch Adedeji, during an interactive session with the Senate Committee on Finance at the National Assembly Complex in Abuja.
Adedeji explained that the forex challenges and the devaluation of the naira were the primary reasons for the exit of these companies. Additionally, some companies cited insecurity and low revenue as contributing factors. The chairman emphasized the significant impact of these losses and exits on the country’s tax revenue.
“The government is deeply concerned because, by law, we cannot collect any taxes from these companies until they recover their losses, which could take up to 10 years. Even if they turn a profit next year, they will report losses carried forward,” Adedeji noted.
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The departure of foreign companies, particularly in the manufacturing and energy sectors, has accelerated since the administration of President Bola Tinubu took office. Notable companies that have discontinued operations in Nigeria include GlaxoSmithKline (GSK), Procter & Gamble (P&G), Sanofi, and Equinor. These exits have significantly impacted the nation’s tax revenue.
Adedeji highlighted the critical role of taxes in stabilizing the economy and maintaining investor confidence. “It’s not just about pursuing profits; it’s about recovering losses from other sectors of the economy. Taxes help balance economic indices, and failing to enforce them could undermine investor confidence in the government.”
He stressed that a responsible government must enforce tax laws to demonstrate economic competence and strategic planning. “If we don’t enforce taxes, investors might believe we don’t know what we’re doing. This enforcement is crucial to show that we have a plan for economic stability and growth.”
Adedeji reassured that the government’s actions are aimed at maintaining investor confidence and ensuring a stable economic environment. “There is nothing that should make investors lose confidence in our government’s commitment to economic stability and development,” he concluded.
