In a bid to expand the tax net and boost revenue generation, the Federal Inland Revenue Service (FIRS) has entered into a strategic partnership with the Market Traders Association of Nigeria (MATAN) to collect and remit Value Added Tax (VAT) from the country’s markets, particularly in the informal sector.
MATAN, known for its impressive membership of over 40 million traders spanning across the nation’s 774 local governments, 36 states, and the Federal Capital Territory, holds a significant position in Nigeria’s market landscape.
Yesterday, during a Stakeholders Engagement Programme on the VAT DIRECT Initiative held in Lagos State, the details of the partnership between FIRS and MATAN were unveiled. This collaboration aims to utilize technology to enumerate traders, facilitate VAT collection, and subsequently contribute to an expanded tax net and increased revenue for the Federation.
The VAT DIRECT Initiative (VDI) represents a groundbreaking program designed to foster collaboration between the FIRS and the market space, with a particular focus on the informal sector. By employing technology, the initiative seeks to streamline the collection and remittance of Value Added Tax (VAT).
Mr. Muhammad Nami, the Executive Chairman of FIRS, emphasized the pioneering nature of this initiative during the Stakeholder Engagement. He highlighted its significance not only for revenue generation but also for addressing the issue of multiple taxation, especially within the informal sector.
Expressing concern over the prevalence of multiple taxes, Mr. Nami, who also serves as the Chairman of the Joint Tax Board (JTB), revealed that both FIRS and JTB were actively working on various strategies to tackle this challenge. The partnership with MATAN lays a strong foundation for the government to combat multiple taxation and the activities of tax officials, agents, and touts operating in the market.
To combat illegal tax collection by touts in markets, Mr. Nami announced that the FIRS would collaborate with security agencies, particularly the Nigeria Police. He assured the market traders that security measures would be put in place to safeguard their operations and eliminate extortion by unauthorized tax collection agents.
“One important area of our collaboration is the issue of providing adequate security in the markets. We are aware of the challenges that you have faced in the past with miscreants, self-imposed tax collection agents, and touts,” stated Mr. Nami. “I want to assure you that as part of this initiative, we will be collaborating with the relevant security agencies, particularly the Nigeria Police Force, to tackle all forms of touting and illegal tax collection by miscreants and keep them away from your markets.”
Moreover, Mr. Nami emphasized that the success of this collaboration would lead to increased revenue, enabling the government to allocate resources for infrastructure development and social amenities.
“The successful outcome of this collaboration and additional revenue accruable will have multiplier effects on all sectors of the economy as the government will have more revenue to provide the needed social amenities and infrastructure in critical sectors,” he added. “An improved VAT collection will improve the revenue base of the States and Local Governments at the sub-national level, and the citizens will be the ultimate beneficiaries.”
Recognizing the prevailing low compliance and awareness of VAT obligations in the informal sector, Mr. Nami stressed the importance of leveraging the MATAN platform to bring about a positive change in this regard.
To ensure transparency and accountability in project operations, a joint monitoring and evaluation team comprising representatives from both FIRS and MATAN will be established, according to Mr. Nami.
During the Stakeholder Engagement, the Executive Chairman also unveiled an Identity Card that will be issued to each trader upon enumeration. The card will contain their tax identification number and other personal details, aiming to streamline the process and enhance efficiency.
The VAT Direct Initiative Stakeholder Engagement witnessed the presence of key participants, including the Secretary of the Joint Tax Board, representatives from Deposit Money Banks, Iyalojas of Markets from across the country, members of various trade clusters, representatives from major markets nationwide, and officers of the Federal Inland Revenue Service.
