IN a move aimed at expanding the tax base, Nigeria’s federal revenue agency has announced a partnership with the Market Traders Association of Nigeria (MATAN) to collect value-added tax (VAT) from millions of informal traders. The collaboration is part of President Bola Tinubu’s government’s efforts to broaden tax revenue sources in Africa’s largest economy.
Nigeria is currently implementing its most ambitious reform agenda in decades, which includes measures such as the removal of a popular petrol subsidy and restrictions on foreign exchange trading. These reforms are intended to stimulate sluggish economic growth.
The Federal Inland Revenue Service (FIRS) has highlighted that Nigeria has one of the lowest tax collection rates globally, standing at around 10.8 percent of GDP. Only 47 percent of this year’s budget is expected to be financed through revenue, with the remaining portion relying on borrowing.
In a statement, the FIRS announced t
he partnership with MATAN, emphasising the goal of curbing illegal tax collection activities in Nigeria’s market spaces. The collaboration will involve the collection and remittance of VAT from MATAN members, particularly those operating in the informal sector. A digital platform will be utilized to track their turnover for tax purposes.
MATAN represents over 40 million traders, primarily in the informal sector where a significant portion of Nigerians earn their livelihoods. As part of the initiative, MATAN members will be issued identity cards with tax identification numbers, facilitating the monitoring and enforcement of tax compliance.
The partnership between the federal revenue agency and MATAN demonstrates the government’s commitment to widening the tax base and improving re
venue generation in Nigeria. By formalising tax collection from informal traders, the government aims to reduce the influence of unauthorised tax collectors and enhance transparency in the market spaces.
