The Nigerian government under the administration of Bola Ahmed Tinubu has revealed the plan to be taxing street traders, artisans, and other jobs in the informal sector.
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mohammed Nami disclosed this in a statement issued on Monday, July 3, 2023.
It is said that taxing the informal sector promotes good governance and political accountability, ensuring the informal sector has the right to request for certain services as demanded by the formal sector, which is being taxed.
He said the FIRS is partnering with the Market Traders Association of Nigeria (MATAN) to collect & remit VAT from their members especially those in the informal sector using a unified systems technology.
The FIRS is the agency responsible for collecting Valued Added Taxes in Nigeria and other revenues accruable to the FG.
The Market Traders Association of Nigeria, founded in 1995, in the statement revealed that it is the largest player in Nigeria’s informal market space with a membership of over 40 million
The FIRS noted that it is partnering with MATAN to collect and remit Valued Added Taxes from their members- especially those in the informal, adding:
“This collaboration is known as VAT Direct Initiative.
“A collaboration between FIRS and MATAN where MATAN promotes awareness on VAT collection and remittance in the marketplace and informal sector, while also simplifying VAT payment and remittance for the marketplace and informal sector using a purpose-built digital platform.
They also noted that MATAN has a digital platform that enumerates their members giving them a digital ID card and tracks their turnover so that VAT accrued is collected and remitted to the FIRS, adding:
“The Initiative is the first of its kind that will utilize technology to foster collaboration between the FIRS and the marketplace for the collection and remittance of VAT.
FIRS says this will help tackle multiple taxations in the marketplace through partnerships with security agencies to curb the activities of touts and self-imposed tax collectors.
“This will also boost VAR revenue generation for the three tiers of government, which in turn means more money to fund infrastructure and social amenities.”
MATAN members will each receive an ID card upon enumeration, which would contain their Tax Identification Number and other personal details.
Recall that Nigeria’s Value Added Tax (VAT) increased by 1.75% on a quarter-on-quarter basis, reaching N709.59 billion in Q1 2023.
The manufacturing sector accounted for the largest share of VAT collection in Q1 2023 at 29.65%.
Information and communication followed with a share of 19.29%, while mining & quarrying contributed 12.24% to VAT collection during the same period.