The Nigerian Government, through the Federal Inland Revenue Service (FIRS), has announced the VAT Direct Initiative aimed at collecting Value Added Taxes (VAT) from the informal sector and reducing multiple taxations in the informal economy.
In a statement released on Monday, the FIRS disclosed that it is partnering with the Market Traders Association of Nigeria (MATAN) to collect and remit VAT from their members, particularly those in the informal sector, using a unified systems technology.
MATAN, founded in 1995, is the largest player in Nigeria’s informal market space with a membership of over 40 million traders.
The VAT Direct Initiative is a collaboration between the FIRS and MATAN, where MATAN promotes awareness on VAT collection and remittance in the marketplace and informal sector. It also simplifies VAT payment and remittance for the marketplace and informal sector through a purpose-built digital platform.
The FIRS highlighted that this initiative, the first of its kind, will utilize technology to foster collaboration between the FIRS and the marketplace for the collection and remittance of VAT. The partnership aims to tackle multiple taxations in the marketplace and curb the activities of touts and self-imposed tax collectors through collaborations with security agencies.
MATAN members will be enumerated and issued an ID card containing their Tax Identification Number and other personal details. This digital scheme will track their turnover, ensuring that VAT accrued is collected and remitted to the FIRS.
The FIRS expects that the VAT Direct Initiative will boost VAT revenue generation for all tiers of government, providing more funds for infrastructure development and social amenities.
In the first quarter of 2023, Nigeria’s VAT increased by 1.75% quarter-on-quarter, reaching N709.59 billion. The manufacturing sector accounted for the largest share of VAT collection, followed by the information and communication sector and mining and quarrying sector.
