By Modupe Gbadeyanka
The need to expand the country’s tax net and generate more revenue for the government has forced the Federal Inland Revenue Service (FIRS) to design a scheme for the collection and remittance of value-added tax (VAT).
Nigeria charges 7.5 per cent as VAT on goods and services, but one challenge it has faced before now is the collection of these earnings from the informal sector.
To make the collection and remittance seamless, FIRS has partnered with the Market Traders Association of Nigeria (MATAN).
The tax body said MATAN has a membership of well over 40 million traders across the country’s 774 local governments and 36 States plus the Federal Capital Territory.
Speaking at a Stakeholders Engagement Programme on the VAT DIRECT Initiative in Lagos on Wednesday, FIRS said the collaboration would utilise the deployment of technology to enumerate traders for VAT remittance.
The VAT DIRECT Initiative (VDI) is a program designed to foster collaboration between the FIRS and the marketplace, especially the informal sector, in the collection and remittance of VAT using technology.
The Executive Chairman of FIRS, Mr Muhammad Nami, said the initiative was the first of its kind,
and that it was crucial to revenue generation and also to eliminating multiple taxations, especially from the informal sector.
He further stated that the government is worried about the multiplicity of taxes and that the service and the Joint Tax Board (JTB) were working on various modalities of addressing this challenge and that this partnership has laid a very good foundation for the government to address the issue of multiple taxation and extortion by tax officials, tax agents and touts in the market place.
He further noted that the service would collaborate with security agencies, especially the Nigeria Police, to deal with illegal tax collection by touts in markets.
“One important area of our collaboration is the issue of providing adequate security in the markets. We are aware of the challenges you have faced with miscreants, self-imposed tax collection agents, and touts.
“I want to assure you that as part of this initiative, we will be collaborating with the relevant security agencies, particularly the Nigeria Police Force to tackle all forms of touting and illegal tax collection by miscreants and keep them away from your markets.”
Mr Nami further noted that the success of this collaboration would lead to increased revenue for the country and, in turn, provide the government with the needed resources to fund infrastructure and other social amenities.
“The successful outcome of this collaboration and additional revenue accruable will have multiplier effects on all sectors of the economy as the government will have more revenue to provide the needed social amenities and infrastructure in critical sectors.
“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.
“The administration of VAT in the informal sector is characterized mainly by a low level of compliance and a lack of awareness in terms of obligation and liability. It, therefore, becomes necessary to leverage the MATAN platform to positively change the status quo,” Mr Nami stated.
He also noted that to ensure transparency and accountability of the project operations, a combined monitoring and evaluation team comprising both organisations would be formed.
