The apex body responsible for the collection of taxes in Nigeria (FIRS) has recently announced the collection and remittances of Value Added Tax (VAT) from the market traders to increase the tax net. This development is in partnership with the Market Traders Association of Nigeria (MTAN) and shall help the Federal Government in the collection and remittance of this tax. The collaboration is however termed ‘VAT Direct Initiative’. According to Muhammad Nami, the FIRS chairman, a team comprises of both the member of the FIRS and the MTAN will be formed and shall be “saddled with the responsibility of ensuring that VAT remittance is promptly done under the agreed platform.”
Despite the low purchase power and high cost of living in the country, the VAT direct initiative was introduced which will be having impacts on both the country’s tax revenue as well as the taxpayer. The impact on taxpayers (Market Traders) may be negative or positive to his/her operation depending on the effectiveness of their recording system. This means that accurate record-keeping will help market traders take advantage of the tax laws, thereby avoiding tax legally.
In an environment full of corrupt practices in all arms of affairs, it may be more costly to entrust your VAT calculation, and processes to the wrong hands. This is because only the net amount of VAT should be paid after deducting all the input VAT from the goods you had earlier purchased, which may not be considered when determining your VAT liability when not handled by a professional. Where a trader fails to have a VAT inclusive in their sales, the business performance will be low since the cost of selling the items is on the high side.
As a business person who desired to maximize profit, it is best to hire a professional tax consultant who shall handle all the VAT calculations and assist with all tax matters while you focus on your business.
Are you a market trader and want to know more about the VAT Direct Initiative? Contact FINNOVO
