7 Major Concerns of Manufacturers Over the FRCN’s New Annual Charges
Recent changes to the Financial Reporting Council of Nigeria (FRCN) Amendment Act have raised significant alarms among manufacturers, particularly those who are part of the Manufacturers Association of Nigeria (MAN). Here are the key concerns highlighted by the association as stated in the statement signed by Director General of MAN, Segun Ajayi-Kadir:
1. Astronomical Annual Charges:
The new FRCN Amendment Act mandates annual charges for non-listed entities based on a percentage of their turnover, with no cap for most manufacturers. This can lead to exorbitant fees, especially for companies that may not be profitable.
2. Disproportionate Impact on Non-Listed Companies:
Unlike publicly quoted companies, which face a maximum annual charge of N25 million, non-listed entities are subjected to charges that could far exceed that amount, disproportionately affecting smaller and medium-sized manufacturers.
3. Severe Penalties for Non-Payment:
The Act introduces heavy penalties for non-compliance, including a 10% monthly surcharge on unpaid dues and potential imprisonment for executives. This criminalization of non-payment is viewed as excessively harsh, particularly for companies struggling financially.
4. Administrative Revenue Generation:
Critics argue that the funds collected under the new provisions are primarily for the administrative purposes of the FRCN, raising concerns about the fairness and justification of imposing such heavy fees on businesses.
5. Strain on Businesses During Tough Times:
The timing of these charges is particularly problematic, as manufacturers are already facing significant challenges in the current economic climate. The additional financial burden could jeopardize their operations and sustainability.
6. Threat to Ease of Doing Business:
The new charges are seen as a direct contradiction to the government’s commitment to improving the ease of doing business in Nigeria. Manufacturers fear that such regulations could stifle growth and investment in the productive sector.
7. Call for Immediate Reassessment:
The Manufacturers Association of Nigeria urges the FRCN to pause the implementation of these fees and consider the broader implications for the manufacturing sector. They advocate for alignment with upcoming tax reforms to promote a more conducive business environment.
In light of these pressing concerns, manufacturers are advocating for urgent government intervention to alleviate the financial strain and foster a more supportive climate for business growth in Nigeria.