THE Federal Government is considering a more harmonized tax regime for all sectors of the economy, including the informal sector.
Acting Chairman of the Federal Inland Revenue Service, FIRS, and Chairman Joint Tax Board, Mr. Kabir Mashi, informed the public during a sensitization workshop on Presumptive Tax Regime in Nigeria held in Abuja yesterday.
Mashi said taxation in the informal sector, especially for persons and businesses not structured properly in terms of record keeping, had remained a major challenge not only in Nigeria but also in most developing nations of the world.
He said: “Different countries have fashioned out different strategies to effectively tax individuals in this category of informal sector. Some countries in dealing with this issue, have leveraged on the experiences of others, while others decided to fashion out their own specific strategy.
The apex tax authority has decided to adopt a hybrid in developing a workable presumptive tax regime, having looked at experiences of other countries in order to tailor it to Nigeria’s local circumstances. The regime would help drag a lot of people in the informal sector that had been evading the payment of tax into the tax net.”
Mashi emphasized that the the country had a large pool of taxpayers and potential tax payers in the informal sector, which could contribute a significant amount to tax collection if they were properly assisted to comply with tax laws.
“Such a large pool of taxpayers cannot be ignored by any tax system which seeks to make taxation the pivot of national development.”
According to him, one of the major reasons for the amendment of the Personal Income Tax (PITA) was to bring it to date with existing realities of the Nigerian economy, especially in relation to how the Act impacts on low and middle income earners.
He urged the stakeholders to brainstorm on the most suitable approach or approaches to taxing the informal sector, which will serve as input and materials needed to draft relevant legislation or amendment to existing legislation.