PwC’s Fiscal Policy Partner and Africa Tax Leader, Mr. Taiwo Oyedele, has revealed that market vendors participating in the VAT Direct Initiative will be excluded from paying VAT if their company has a turnover of less than N25 million.
According to Nairametrics, he revealed this on Tuesday while speaking about the new Value Added Taxes effort between the FIRS and the Market Traders Association of Nigeria in an interview.
He also said that doing so would make it possible for the state and federal governments to obtain the necessary data and information about the informal sector.
He said that although the law is not brand-new, the execution of the new partnership is what counts.
“It is also essential to note that this was an agreement between FIRS and MATAN, which indicates that it was not imposed on them and that they chose to participate in it.”
Regarding exemptions, he noted that specifically, it includes VAT exemptions for business owners with annual sales of less than N25 million, adding that there are additional exemptions for basic food items because MSMEs and dealers make up more than 90% of firms in the micro area.
He disclosed that the FIRS is utilizing its power to prevent non-state actors from collecting taxes, extorting money, and paying VAT where it is due.
“The informal sector will eventually become more formally integrated into the economic system, which is excellent for traders since they will pay less. It can also provide federal and state governments with economic data for planning.
The Nigerian government announced the VAT Direct Initiative through the Federal Inland Revenue Service, a program that would allow the FG to collect Value Added Taxes from the informal sector and decrease various taxes in the informal economy.
The partnership between FIRS and MATAN is known as the VAT Direct Initiative. Through the use of a specially designed digital platform, MATAN promotes awareness of VAT collection and remittance in the marketplace and informal sector.
The Market Traders Association of Nigeria and the FIRS are collaborating to collect and remit VAT from their members, particularly those in the informal sector, utilizing a unified systems technology, the FIRS announced in a statement on Monday afternoon.
