In an effort to tap into the vast potential of the informal sector, the Federal Inland Revenue Service (FIRS) has unveiled a series of incentives designed to attract businesses into the formal tax.
The informal sector, comprising a multitude of small-scale businesses operating outside the formal regulatory framework, has long been a challenge for tax authorities worldwide. Nigeria is no exception.
The FIRS recognizes the importance of bringing the informal sector into the tax net to enhance revenue generation and promote economic growth. By offering tailored incentives, the agency aims to create a more conducive environment for these businesses to transition into the formal economy.
The FIRS is considering implementing simplified tax procedures and reduced rates for small and micro-enterprises to alleviate the administrative burden and financial costs associated with tax compliance. The agency may offer incentives for businesses to register with the FIRS, such as tax holidays or reduced penalties for late registration.
The FIRS is exploring digital platforms to streamline the registration process and make it more accessible to businesses in remote areas.
The FIRS is also leveraging technology to modernize the tax system and enhance efficiency. The introduction of the FIRS e-Invoice is a significant step in this direction, allowing for real-time transaction validation and storage.
By expanding the tax base and improving tax compliance, the FIRS aims to contribute to sustainable economic growth. Increased tax revenue can be used to fund essential public services and infrastructure development.
The FIRS’s initiative to incentivize businesses in the informal sector is a crucial step towards a more inclusive and equitable tax system in Nigeria. By addressing the unique challenges faced by these businesses, the agency hopes to unlock their potential and drive economic prosperity.
