The Federal Government in its bid to increase the revenue-base and also bring more people into the tax- system recently launched the Voluntary Assets and Income Declaration Scheme (VAIDS).This window is open from July 1 2017- March 31 2018. The scheme seeks to provide a time-limited opportunity for tax-payers to regularize their tax status relating to previous tax periods and pay taxes due. In exchange for fully and honestly declaring previously undisclosed assets and income, taxpayers will benefit from forgiveness of overdue interests and penalties, and also an assurance they do not face criminal prosecution for tax offences and tax investigation. In the Past, a lot of companies and individuals have found a way to circumvent their tax obligations and are either defaulting in tax payments or not complying at all. This is not only a criminal offence; it hinders the country’s development and leaves an unfair burden of payment on those who comply.
The scheme also seeks to improve the low tax to Gross Domestic Product [GDP] ratio currently about 6% to about 15% by 2020, broadening the Federal and State tax brackets. Curbing non-compliance with existing tax laws and discouraging use of tax havens. Research has shown that only 214 individuals nationwide pay N20 million or more in tax annually.The 9-month window given to tax defaulters is implemented by the Federal Inland Revenue Service (FIRS) and the Internal Revenue Service Offices across states of the Federation. The major targets of this scheme are individuals resident in Nigeria and companies operating in Nigeria. However, the primary targets are multinational enterprises and high Net Worth Individuals(HNIs). The disclosure requirements would be in respect of all taxes payable to all levels of government – federal, state and local government taxes including Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax and Technology Tax.Any defaulter by the end of this window period will be investigated and if found culpable will be prosecuted in addition to full payment of tax due including penalty and interest.
At a recent event, the Chairman of the Federal Inland Revenue Service(FIRS) Mr. Babatunde Fowler made a disclosure that over $50million has been remitted since the commencement of the program. However, the target is to raise at least $1 billion from this ‘amnesty period’. Efforts are also on by government in mining data on individuals and businesses who received payments of up to N100 million between 2010 and 2015. The data are being mined from bank accounts, Federal Inland Revenue Service (FIRS), state lands departments, Corporate Affairs Commission (CAC), Securities and Exchange Commission (SEC), National Identity Management Commission (NIMC), land registries, treasury bills and Nigerian Inter-Bank Settlement System (NIBSS), among others.A similar scheme was adopted in India which resulted in the addition of over 350,000 individuals to the tax net yielding approximately US$1.2 billion. There will be collaboration with foreign governments where assets and illicit funds are likely to be held by Nigerians. Government must leverage on various international agreements including the recently ratified Convention on Mutual Administrative Assistance in Tax Matters which has been signed by over 100 countries.
Lastly, Nairametrics in line with our mandate to promote knowledge in the pursuit of Nigeria’s progress, is of the opinion that the country needs to take taxation more seriously. This is not just for the revenue motive but because it also provides a trigger for civic engagement around which citizens can call the government to account. Nigeria’s dependence on oil revenue, which is generally treated as free money and therefore “nobody’s money”, has not done the cause of accountability and transparency any good.
Fikayo Owoeye writes for Nairametrics