The Federal Inland Revenue Service (FIRS) has taken a significant step towards tackling multiple taxation by partnering with the Market Traders Association of Nigeria (MATAN) to collect and remit Value Added Tax (VAT) from markets in the country, particularly in the informal sector.
MATAN, which boasts a membership of over 40 million traders across all 774 local governments and 36 states, as well as the Federal Capital Territory, is a key player in Nigeria’s market space.
The details of the partnership were disclosed at the VAT DIRECT Initiative Stakeholders Engagement Programme held in Lagos State. This collaboration will leverage technology to enumerate traders, enabling efficient VAT collection and remittance to the FIRS. Ultimately, this will expand the country’s tax net and result in increased revenue for the Nigerian Federation.
The VAT DIRECT Initiative (VDI) is a pioneering program designed to enhance cooperation between the FIRS and the market sector, particularly the informal economy, to facilitate the collection and remittance of Value Added Tax using technology.
The Executive Chairman of FIRS, Mr. Muhammad Nami, emphasized the significance of the initiative in revenue generation and the elimination of multiple taxation, particularly in the informal sector. He also serves as the Chairman of the Joint Tax Board (JTB), the body responsible for harmonizing tax administration in Nigeria.
Mr. Nami expressed the government’s concern regarding the issue of multiple taxes and highlighted that the FIRS and JTB are working on various strategies to address this challenge. He lauded the partnership as an excellent foundation for the government to tackle the issue of multiple taxation and extortion by tax officials, agents, and touts in the marketplaces.
He further stated that the FIRS would collaborate with security agencies, particularly the Nigeria Police, to address the problem of illegal tax collection by touts operating in markets.
“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,” Mr. Nami assured the traders during the stakeholders’ engagement.
Mr. Nami emphasized that the success of this collaboration would lead to increased revenue for the country, which would enable the government to fund infrastructure development and provide essential social amenities.
“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. This initiative is very important to the government, particularly at this moment of dwindling revenues from the petroleum sector, and therefore requires that we put all hands on deck and optimally explore all available opportunities,” Mr. Nami stated.
To ensure transparency and accountability in the project’s operations, a combined monitoring and evaluation team comprising representatives from both FIRS and MATAN will be formed.
During the Stakeholders Engagement, the FIRS Executive Chairman 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.
The VAT DIRECT Initiative Stakeholders Engagement was attended by representatives from Deposit Money Banks, the Secretary of the Joint Tax Board, Iyalojas of Markets across the country, members of various trade clusters, representatives from major markets nationwide, and officers from the Federal Inland Revenue Service.
