In a statement to the press, the Chairman of the Federal Inland Revenue Service (FIRS) revealed that Nigeria had suffered substantial tax revenue losses as a result of foreign companies leaving the country and suspending their operations. This setback was attributed to the foreign exchange crisis, which caused significant financial losses for the manufacturing industry in the country, estimated at around N1.7 trillion in 2023 alone.
FIRS Chairman Zack Adedeji disclosed this on Monday during an interactive session with the Senate Committee on Finance at the State House, Abuja.
“I don’t know anyone who followed this last year. I can tell you that all manufacturing companies in Nigeria have reported losses of 1.7 trillion naira just on foreign exchange trading, and in some sectors of the economy, losses of 1.7 trillion naira have been reported. And ask what this means for the 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.
Since President Bola Tinubu took office, foreign companies have been leaving the country, especially manufacturing and energy companies.
The most commonly cited reason for leaving was exchange rate issues and the devaluation of the naira. Others cited uncertainty and low profits as other reasons.
Manufacturing companies that have suspended operations in Nigeria include GlaxoSmithKline (GSK), Procter & Gamble (P&G), French multinational pharmaceutical company Sanofi, and Norwegian oil company Equinor.
Adedeji noted that losses and withdrawal of companies have caused the country huge losses in terms of tax revenue.
“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”.
Adedeji explained that the Federal Government needs taxes to balance the economic indicators. He said if the government does not enforce taxes, foreign investors may lose confidence in the government.
“When we talk about the real role of taxes, do they help in preparedness? Yes. Otherwise people will think that as a country we don’t know what we are doing. If this does not happen, genuine investors will leave Nigeria because this is how we balance our economic indicators, and it shows that we actually know what we are doing and 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,” the FIRS chairman said
