The government of President Bola Ahmed Tinubu has unveiled a groundbreaking initiative called the Value Added Tax (VAT) Direct Initiative, aimed at enabling the Federal Government to effectively collect taxes from the informal sector. The announcement was made by the Federal Inland Revenue Service (FIRS) in a statement released via its official Twitter handle on Monday.
Under this new initiative, FIRS will collaborate with the Market Traders Association of Nigeria (MATAN) to facilitate the collection and remittance of VAT from their members, particularly those operating within the informal sector. The partnership aims to raise awareness about VAT collection and remittance in the marketplace and informal sector, while concurrently simplifying the VAT payment and remittance process through the utilization of a purpose-built digital platform.
By joining forces with MATAN, FIRS seeks to educate market traders and participants in the informal sector about their tax obligations and streamline the process of VAT payment. The introduction of the digital platform is expected to enhance the convenience and efficiency of VAT remittance for businesses operating in the marketplace and informal sector.
In addition to facilitating tax compliance, this collaboration between FIRS and MATAN is poised to significantly boost revenue generation from VAT for all three tiers of government. The increased revenue will provide the government with additional funds to invest in critical infrastructure projects and improve social amenities, thereby enhancing the overall welfare of the Nigerian populace.
The latest report from the National Bureau of Statistics reveals that Nigeria collected a substantial amount of N1.18 trillion as VAT and company income tax in the first quarter of 2023. This figure underscores the significance of effective tax collection and enforcement in the country.
Amidst Nigeria’s mounting debt burden, which currently stands at approximately N49.85 trillion, the Debt Management Office recently emphasized the urgent need to expand the country’s tax net. Increasing tax collection from the informal sector and implementing measures to ensure tax compliance will play a crucial role in managing the nation’s debt sustainably and fostering economic stability.
In conclusion, President Bola Ahmed Tinubu’s government has taken a significant step toward enhancing tax collection from the informal sector through the introduction of the VAT Direct Initiative. The partnership between FIRS and MATAN, along with the implementation of a purpose-built digital platform, aims to simplify VAT payment and remittance processes for market traders and participants in the informal sector. This collaborative effort is expected to bolster revenue generation from VAT and support the government’s efforts to develop critical infrastructure and improve social amenities. With Nigeria’s increasing debt burden, expanding the tax net and promoting tax compliance are crucial for the country’s long-term financial stability and economic progress.