Nigeria (Common Wealth) _ Nigeria’s federal revenue agency announced on Monday that it had worked with a traders group to collect value added tax (VAT) from millions of informal traders as part of President Bola Tinubu’s government’s attempt to broaden the tax base.
Tinubu’s gamble to improve slow growth has resulted in Africa’s largest economy embarking on its most daring reform agenda in decades, including the elimination of a popular petrol subsidy and curbs on foreign exchange trading.
According to the Federal Inland Revenue Service (FIRS), Nigeria has one of the lowest tax collection rates in the world, at roughly 10.8% of GDP. Only 47% of this year’s budget will be funded by receipts, with the remainder coming from borrowing.
In a statement, the FIRS said it was collaborating with the Market Traders Association of Nigeria (MATAN) to collect and remit VAT from its members, particularly those in the informal sector, using a digital platform.
It stated that the collaboration will assist “curb the activities of touts, miscreants, and self-imposed tax collectors involved in illegal tax collection in Nigeria’s market spaces.”
MATAN claims to have over 40 million traders, the bulk of whom work in the informal sector, where the majority of Nigerians earn a living.
MATAN members will obtain identity cards with tax identification numbers, according to the revenue office, and a computerized portal will track their turnover for tax purposes.
Nigeria and other African Union countries are working to pass legislation to increase income $220 billion in tax revenue.
There are also plans to increase revenue from cross-border transactions by around $40 billion. Members of the union wrapped up a three-day meeting in Addis Ababa, Ethiopia, of the Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration-Sub-Committee on Tax and Illicit Financial Flows.
Its theme was “Tax in Africa: Current Issues Affecting the Continent.”
The members endorsed suggestions to preserve African interests in the creation and implementation of global tax regulations, as well as measures to promote domestic resource mobilization for Africa’s development.
