The Manufacturers Association of Nigeria has raised the alarm over what it described as an “astronomical” annual charge imposed on private companies by the Financial Reporting Council of Nigeria under the recently amended Financial Reporting Council of Nigeria Act.
The Director-General of MAN, Segun Ajayi-Kadir, in a statement on Sunday, warned that the new provisions, particularly those affecting non-listed companies, pose a major threat to the struggling manufacturing sector.
“For publicly quoted companies, the maximum payment earlier was N1m per annum. Now, that amount has been hiked to N25m! Quite incredibly, for non-listed companies, who were previously excluded, there is no cap, and it is linked to the turnover, irrespective of whether the company is profitable or not,” Ajayi-Kadir stated.
Section 33 of the amended Act mandates an annual charge on non-listed companies, pegged at a percentage of their yearly turnover.
Companies with an annual turnover exceeding N10bn could pay as much as 0.05 per cent of their revenue.
Ajayi-Kadir described this as an undue financial burden on manufacturers, many of whom are already grappling with economic hardship.
“Criminalising non-payment of fees, the utilisation of which is more administrative in nature, makes the FRCN Amendment Act, 2023, a draconian law with no choice left for the entities but to comply and pay,” the MAN DG said.
The law also introduces severe penalties for defaulters, including a monthly fine of 10 per cent of the unpaid fee and possible imprisonment for company executives.
“The strict penalties and possible conviction to imprisonment could be construed as having the nature of a criminal law. Generally, non-payment of fees or dues typically results in other penalties or fines, while imprisonment provisions are applicable only in cases where non-payment is seen as an act of defiance or fraud,” he added.
MAN warned that implementing the charge at a time when manufacturers are battling forex scarcity, high inflation, and multiple taxation could cripple the sector.
“The investments of the productive sector of the economy will be negatively impacted if the continued implementation of this annual charge and the strenuous efforts of FRCN to execute the same are not halted,” Ajayi-Kadir stressed.
He called on the government to intervene and suspend the implementation of the charges, urging FRCN to align with ongoing tax reforms.
“This will bring relief to anxious and long-suffering manufacturers and other business owners. Quite importantly, it will boost our commitment to ease of doing business and align with the broader objectives of the fiscal policy and tax reforms agenda of President Tinubu,” he stated.
MAN reiterated its commitment to supporting a business-friendly regulatory environment and urged the authorities to reconsider policies that could stifle industrial growth.
