In a bid to revolutionize tax collection and reduce the burden of multiple taxation in the informal economy, the Nigerian Government, through the Federal Inland Revenue Service (FIRS), has launched the VAT Direct Initiative.
This groundbreaking scheme aims to enable the government to effectively collect Value Added Taxes from the informal sector while ensuring a simplified and unified system.
In an official statement released on Monday, FIRS announced its strategic collaboration with the Market Traders Association of Nigeria (MATAN) to facilitate the collection and remittance of VAT from its members, particularly those operating within the informal sector.
Leveraging a purpose-built digital platform, this initiative seeks to streamline the process of VAT payment and remittance for businesses operating in the marketplace and informal sector.
The FIRS emphasized the importance of tackling the issue of multiple taxations in the marketplace. To address this challenge, the agency intends to collaborate with security agencies to curb the activities of touts and self-imposed tax collectors, thus providing a more transparent and efficient taxation system for businesses.
By implementing this initiative, the government aims to boost VAT revenue generation, thereby creating more resources to fund critical infrastructure projects and social amenities across the country.
Under the VAT Direct Initiative, each member of MATAN will be enumerated and issued an ID card containing their unique Tax Identification Number (TIN) and other pertinent personal details.
This identification system will aid in monitoring and ensuring compliance with tax obligations, enabling the government to better track revenue collection and facilitate targeted interventions where necessary.
However, this move comes at a time when Nigerians are already grappling with the removal of fuel subsidies and foreign exchange reforms. The introduction of a new tax in the informal sector may further burden individuals and businesses operating within this segment of the economy.
As a result, there are indications that some informal sector groups may stage protests against the imposition of this new tax by the FIRS.
The Nigerian Government, through the FIRS, believes that the VAT Direct Initiative will not only enhance tax collection and reduce multiple taxations but also promote a fair and transparent business environment.
By leveraging technology and partnerships with key stakeholders like MATAN, the government aims to create a taxation system that fosters economic growth and development while alleviating the burden on businesses operating in the informal sector.