The Federal Inland Revenue Service (FIRS) has announced a strategic partnership with the Market Traders Association of Nigeria (MATAN) to revolutionize the collection and remittance of value-added tax (VAT) in the informal sector through the implementation of unified systems technology.
The collaboration, known as the VAT Direct Initiative (VDI), aims to enhance VAT collection and raise awareness about remittance requirements within the marketplaces and informal sector. By leveraging technology, the initiative also aims to simplify the process of VAT payment and remittance for businesses operating in the informal sector.
In a statement released by the FIRS, it was highlighted that this partnership with MATAN will grant the agency access to Nigeria’s vast market space, which comprises over 40 million traders across the country. MATAN’s digital platform will play a crucial role by providing digital identification for its members and tracking their turnover, enabling the collection and remittance of the VAT accrued to the FIRS.
Through the VDI, the FIRS intends to address the issue of multiple taxation in the marketplaces by collaborating with security agencies to combat the activities of individuals involved in illegal tax collection, such as touts, miscreants, and self-appointed tax collectors.
Additionally, the VDI is expected to significantly boost VAT revenue generation for all three tiers of government, providing them with additional funds to invest in infrastructure development, social amenities, and the welfare of citizens.
The partnership between FIRS and MATAN will establish a monitoring and evaluation team comprising FIRS officers and MATAN members. This team will ensure transparency, accountability, and the prompt remittance of VAT while fostering sustained commitment, all of which are essential for building public confidence in the tax collection process.
As part of the initiative, each MATAN member will be issued an Identity Card upon enumeration, containing their Tax Identification Number (TIN) and other personal details required for tax purposes.
Despite the extensive economic activities in the informal sector, Nigeria’s tax net has primarily focused on the formal sector. Recognizing the untapped potential for tax collection in the informal sector, tax experts have highlighted the significance of this collaboration in expanding the tax base and maximizing revenue potential.
