Last week, the Federal Government introduced the Voluntary Asset and Income Declaration Scheme (VAIDS) as part of its measures to improve tax collection in the country. VAIDS provides an opportunity for taxpayers who are in default under all relevant Statutes to voluntarily declare their Assets and Income and pay taxes due on them and in return obtain some benefits.
The Acting President Professor Yemi Osinbajo gave VAIDS some teeth via an executive order numbered 004 of 2017. We read through the order and summarized 10 of the most important things you need to know about the order.
1). VAIDS will last for just is a nine (9) month providing a window of opportunity to allow taxpayers who owe taxes to voluntarily declare their Asset and Income from within and outside Nigeria; and pay taxes due on them while in return they get some benefits.
2). The scheme only covers the last six (6) years period before you applied for VAIDS. This means that you can only claim benefits for taxes owed 6 years before you applied. Any back taxes over 6 years earlier will not qualify for VAIDS.
3). Using this scheme helps tax payers regularize their tax outstanding ensuring that your full tax is paid without having to apply via touts or any other illegal means.
4). The companies and/or individuals that qualify for VAIDS are as follows:
Those who earn an income or own assets but are yet to register with the relevant tax authorities (i.e.Federal Internal Revenue Service (FIRS) and State Internal Revenue Service);
Those who are registered with the relevant tax authority, earn income and own assets but have not declared such to authorities.
Those who have not been fully declaring their taxable income and assets;
Those that have been paying taxes but have been underpaying or under remitting;
Companies or individuals who are under a process of tax audit or investigation with the relevant Tax Authority; and/or
And finally, those that are engaged in a tax dispute with the relevant Tax Authority but are prepared to settle the tax dispute out of court.
5). For your application to the Scheme to be recognised, it must meet the following requirements:
the disclosures by the taxpayer should be voluntary (meaning you are not induced or forced to use it ).
the disclosure must be full, frank, complete and verifiable in all material respects;
use only VAIDS forms or any other form prescribed under the Scheme for the disclosure
engage only relevant tax authority in estimating the tax owed
4). You stand to enjoy the following benefits with respect to taxes at both Federal and State level when you embrace VAIDS:
you will no longer be prosecuted for the tax offenses committed
you are excluded from tax audit;
you will not be required to pay interest on the tax owed;
waiver of penalties and the opportunity to spread payment of tax owed over a maximum of three years’ period; so far this does not affect or invalidate any standing court order.
7). Anyone owing taxes and fails to take advantage of this Scheme at its expiration shall face the following consequences:
such individual will have to pay the actual amount owed in full,
in addition, would have to pay all interest on the money owed as well as penalties for not paying on time
such person would also be prosecuted in accordance with relevant existing laws for tax offenses
such persons will not enjoy any of the benefits listed above
the relevant tax authority will have to carry out detail scrutiny of your tax books
any amount you pay in relation to the Scheme may be counted as part payment of any further tax you owe in respect of undisclosed information.
8). The government claims that any information you provide under the Scheme shall be treated with utmost confidentiality as stated in the relevant laws save where otherwise stated. This means your secrets will remain with the government and no one else (how funny, right?)
9). VAIDS only applies to persons who have voluntarily declared their assets and income within and outside Nigeria.
10). The Executive Order which established this Scheme is valid only for the period in which the Scheme exist and this order took effect from 1st day of July 2017.