Nigeria's federal revenue agency is working with a traders association to collect value added tax (VAT) from millions of informal traders, part of a push to widen the tax base by President Bola Tinubu's government, the authorities say.
Africa's largest economy has embarked on its boldest reform agenda in decades, including the removal of a popular petrol subsidy and restrictions on foreign exchange trading, a gamble by Tinubu to try boost sluggish growth.
Nigeria has one of the lowest tax collection rates in the world at aroun d 10.8% of GDP, according to the Federal Inland Revenue Service (FIRS). Only 47% of this year's budget will come from revenues and the rest from borrowing.
The FIRS said in a statement on Monday that it was partnering with the Market Traders Association of Nigeria (MATAN) to collect and remit VAT from its members, especially those in the informal sector, using a digital platform.
Turnover tracking
It said the partnership would help "curb the activities of touts, miscreants and self-imposed tax collectors involved in illegal tax collection in Nigeria's market spaces."
MATAN says it has more tha n 40 million traders, mostly in the informal sector where a majority of Nigerians earn a living.
The new revenue collection drive known as VAT Direct Initiative involves the use of ''purpose-built digital platform'' to track traders' turnover as well as collect and remit accrued Value Added Tax.
The revenue agency said MATAN members will receive identity cards with tax identification numbers which will help the digital platform to track their turnover for tax purposes.
Social amenities
The traders association is also expected to create awareness among its members, according to the government statement. This is the first time Nigeria is implementing this initiative using technology to boost revenue generation.
It is not exactly clear how much money the Nigerian government hopes to generate from the scheme. For decades, Nigerians have complained that the government rarely provides social amenities despite tax collections from citizens.
But the government says under the new programme, the taxes will provide ''more money to fund infrastructure, provide social amenities and cater for the welfare of the citizens.''
