THE Manufacturers’ Association of Nigeria (MAN) has described plans by the Financial Reporting Council of Nigeria to criminalise non payment of the newly-introduced annual charge, imposed by the council, on private companies, as draconian, and a tyranny of regulation.
The association’s Director General, Segun Ajayi-Kadir, argued that the implementation of certain provisions of the act, particularly those relating to charges on non-listed entities, like most members of the association, poses significant challenges to the manufacturing companies.
It described the new section 33, introduced under FRCN Amendment Act, 2023, imposing a payment of annual charges of N25 million, instead of the earlier payment of N1m, per annum, for publicly-quoted companies as incredible.
MAN also expressed dismay that non-listed companies, is now linked to the turnover, irrespective of their profitability or otherwise.
The association expressed surprise that the FRCN Amendment Act, 2023, Section 33 Clause 3, could impose heavy penalties on a person or an entity failing to pay annual dues with 10% of the annual due for every month, and in case of chief executive officer, a penalty as may be prescribed by the Council, or on conviction, to imprisonment for a term not exceeding 6 months.
It noted that, while the strict penalties, and possible conviction to imprisonment, is being construed as having the nature of a criminal law, by the Act, non-payment of fees/dues typically attracts penalties or fines, adding that imprisonment provisions can only be applicable in cases where non-payment is seen as an act of defiance or fraud.
“The Section 34 of the Principle Act stipulates that the proceeds of the Fund established under Section 33 of the Act is to be applied for the expenditures of the Council, which incentivizes excessive generation of revenue and makes collection of the fees purely for administrative purposes.
“The utilization, which is more administrative in nature, makes the FRNC Amendment Act, 2023 a draconian law with no choice left for the entities to contest the charge, but to comply and pay the dues,” Man argued.
The association therefore described the development as a direct assault on the government’s commitment to ease of doing business.
“Apart from the reservations against its application to private companies; the astronomical increase for listed companies; the excessive charge on non-listed companies turnover, particularly for loss making companies; the commencement of implementation at this difficult time for manufacturers and other businesses amount to yet another form of aggravated tyranny of regulation, “ it added.
The association noted that 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 same is not halted.
It, therefore, implored the FRCN to be mindful of the potential negative impact of its continued administration of the fees on businesses and put it on hold, while also advising the council to await the enactments of the tax reform laws and realign its operations with the relevant provisions.
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