The Federal Inland Revenue Service (FIRS) has unveiled the VAT DIRECT Initiative (VDI) designed to foster collaboration between the FIRS and the marketplace, especially the informal sector.
The initiative deploys technology to enumerate traders for the purpose of collecting and remitting VAT to the government.
Speaking during the Stakeholder Engagement on the VAT DIRECT Initiative in Lagos on Wednesday, the Chairman of FIRS, Muhammad Nami, who described the initiative as the first of its kind, said it was crucial to revenue generation as it would help in eliminating multiple taxations, especially from the informal sector.
Nami, who is also the Chairman of the Joint Tax Board (JTB), said the government was worried about the challenge of a multiplicity of taxes in the country, adding that the Service and JTB were working on various modalities to address the problem.
He said the VAT DIRECT initiative was a product of the collaboration between the FIRS and the Market Traders Association of Nigeria (MATAN) to ensure VAT revenues were collected from the country’s markets, especially in the informal sector, and remitted to the Federal Government through the FIRS.
MATAN, with membership drawn from over 40 million traders across the country’s 774 local governments, and 36 States, plus the Federal Capital Territory, is considered the biggest player in Nigeria’s market space.
The FIRS Chairman said the partnership with MATAN would see the Service expand its tax net and increase revenue for the Federation.
He said the partnership with MATAN has laid a solid foundation for the government to address the issue of multiple taxation and extortion of taxpayers by tax officials, tax agents and touts in the marketplace.
He confirmed that the Service would collaborate with security agencies, especially the Nigeria Police, to deal with illegal tax collection by touts in markets around the country.
“One important area of our collaboration is the issue of providing adequate security in the markets. We are aware of the challenges that you have faced in the past 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.”
Nami said the success of the collaboration with MATAN would lead to increased revenue for the country, and in turn, provide the government the needed resources to fund infrastructure and other social amenities.
Besides, he said the successful outcome of the collaboration and additional revenue accruable from the initiative would have multiplier effects on all sectors of the economy as more revenue t would be available to the government to provide the needed social amenities and infrastructure in critical sectors of the economy.
An improved VAT collection, he said, would improve the revenue base of the States and Local Governments at the sub-national level, with the citizens as the ultimate beneficiaries.
The initiative, Nami pointed out, was very important to the government, particularly during this period of dwindling revenues from the petroleum sector, which requires all hands to be on deck and optimally explore alternative sources of revenue.
The administration of VAT in the informal sector, the FIRS Chairman noted, was characterized mainly by a low level of compliance and a lack of awareness in terms of obligation and liability.
Consequently, he said it has become necessary for the FIRS to leverage the MATAN platform to positively to change the status quo, adding that to ensure transparency and accountability of the project operations, a combined monitoring and evaluation team, comprising both organizations, would be formed.
During the event, the FIRS Chairman unveiled a sample Identity Card to be issued to each trader in the marketplace upon enumeration. The card contains each trader’s tax identification number and other personal details.
The event was attended by the Secretary of the Joint Tax Board, representatives from Deposit Money Banks, leaders of Markets associations across the country, members of various trade clusters, representatives from all major markets across the country, as well as FIRS officials.
