The Federal Inland Revenue Service (FIRS) is joining forces with the Market Traders Association of Nigeria (MATAN) to introduce a unified systems technology for collecting and remitting value-added tax (VAT) in the informal sector. This partnership, known as the VAT Direct Initiative (VDI), aims to enhance VAT collection and awareness within the marketplaces and informal sector while simplifying the payment and remittance process.
In a recent statement, the FIRS expressed its intention to leverage MATAN’s digital platform, which provides a digital ID and tracks turnover, to ensure the accurate collection and remittance of VAT to the agency. With MATAN boasting a membership of over 40 million traders across Nigeria, this collaboration presents an opportunity for the FIRS to access a significant portion of the country’s market space.
The FIRS emphasized that the VDI will address the issue of multiple taxation in the marketplace by partnering with security agencies to combat the activities of touts, miscreants, and unauthorized tax collectors engaged in illegal tax collection. By streamlining VAT collection through this initiative, the FIRS aims to increase revenue generation for the three tiers of government, providing more funds for infrastructure development, social amenities, and citizen welfare.
Under the partnership, a dedicated monitoring and evaluation team consisting of FIRS officers and MATAN members will ensure transparency, accountability, and prompt VAT remittance. This collaborative effort is crucial to building public confidence in the tax collection process. To facilitate tax compliance, each MATAN member will receive an Identity Card upon enumeration, containing their Tax Identification Number (TIN) and other pertinent details.
Tax experts have long highlighted the untapped potential of taxing the informal sector, which has traditionally been overshadowed by the formal sector in Nigeria’s tax net. This partnership between the FIRS and MATAN signifies a significant step toward bridging this gap and harnessing the potential of the informal sector to contribute to the country’s tax revenues.
As the VDI takes shape, its success is expected to not only bolster VAT revenue generation but also enable the government to allocate more funds to critical areas such as infrastructure development, social amenities, and citizen welfare. By leveraging technology, promoting transparency, and fostering collaboration, the FIRS and MATAN are striving to create a more efficient and inclusive tax system that benefits both the government and market traders in Nigeria’s informal sector.
