Crime
Babatunde Fowler, chairman, Federal Inland Revenue Service says all legal steps will be taken to prosecute tax defaulters
By Anayo Ezugwu
THE federal government is set to prosecute tax defaulters following the expiration of the deadline set for compliance with the Voluntary Assets and Income Declaration Scheme, VAIDS, on Saturday, June 30. Babatunde Fowler, chairman, Federal Inland Revenue Service, FIRS, said the government would take all necessary legal steps to ensure that the defaulters were brought to book.
Fowler, who stated this in an interview at the Presidential Villa, Abuja, on Wednesday July 4, said with the expiration of the VAIDS grace period, defaulters would be made to pay their outstanding taxes with interests and penalties. “The VAIDS expired on June 30, and anyone who has not come forth by now, we shall use all legal means to make sure that we bring them to book and make sure that they pay the appropriate taxes with interests and penalties.
“The response has been very good. We are collating all the figures, both at the federal and the states levels, and I believe that by the middle of July, we should be able to tell the nation the exact progress in terms of the numbers that have declared, amount that have been paid and amount that is going to be paid in instalments,” he said.
According to Fowler, there was no truth in the allegations of double taxation being levelled by some Nigerians. “Let me say once again that we do not really have a situation of multiple taxation. You only have multiple taxation when you pay the same tax to different tiers of government.
“What we have found out is that a lot of people categorise any payment to government as a tax. For example, if they receive a fine, or a penalty, they call it a tax. If they pay for parking space, they call it a tax. Those are the things you refer to as user charges and not taxes.”
Also the Economic and Financial Crimes Commission, EFCC, and the FIRS have agreed to begin a massive clampdown on tax defaulters that failed to take advantage of the tax amnesty window. The agencies vowed to work together to ensure that all unpaid taxes by both individuals and companies, which are due to government, are recovered and remitted into the federation account.
Ibrahim Magu, acting chairman, EFCC, said the commission was ready to do more to bring tax defaulters to book. According to him, people are in a hurry to collect taxes but are reluctant to remit them. “It is very distressing. We may put a team together to ensure that whatever taxes are collected by anybody is remitted and on time,” he said.
Experts believed that the federal government and its agencies need to justify the usage of the tax money to encourage Nigerians in paying tax. Kenneth Erikume, tax partner, PwC Nigeria, said investigations revealed that lack of trust in government to transparently manage tax revenue remains the largest concerns of citizens, especially among tax payers.
At the PwC capability enhancement workshop for journalists, in Lagos, he said tax evasion is a crime punishable, upon conviction, by imprisonment of up to five years. According to him, the taxpayer will still be required to pay the tax due along with the associated interest and penalties.
“Typically, a penalty of 10 percent of the tax due is assessed, along with related interest charges that accrue at 21 percent per annum, commencing from the due date related tax was charged. In some cases, the penalty assessed is 100 percent of the tax due and further, the related assets are liable to be forfeited,” he said.
On his part, Taiwo Oyedele, partner, head, tax and regulatory services, PwC Nigeria, said VAIDS would propel more citizens’ engagement in the demand for accountability and transparency in government. He said VAIDS is a scheme introduced to change the narrative of tax challenges and inadequacies in the country.
“VAIDS is a time-limited opportunity for taxpayers to regularise their tax status relating to previous tax periods. Nigeria’s tax system is based on global best practice. It is a progressive system that ensures fairness. Those with the highest income levels should shoulder the greatest proportion of the burden. Whilst considerable progress has been made with taxing those in formal employment, self-employed persons, professionals and some companies are able to evade full tax payment due to the inability of the tax authorities to assess their true income and thereby tax them accurately,” he said.
Oyedele said Nigeria’s low tax revenues are at variance with the lifestyle of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world. In addition, he said despite having some of the most profitable and well capitalised companies in Africa, the level of tax remittance is low. “
As part of the global support to rebuild Nigeria under President Muhammadu Buhari, the federal government has secured the cooperation of a number of nations in its quest to repatriate funds due to it.
Nigeria has also signed agreements with a number of nations, which provide for automatic exchange of information. These agreements allow the exchange of information between tax authorities of different countries and about financial accounts and investments to help stop tax evasion. Countries who are party to this agreement include Switzerland, Panama, the Bahamas and other tax havens. Additionally, banking information will easily be shared across countries due to newly implemented Common Reporting Standards, CRS.”
The federal government had in April this extended VAIDS window to June 30 following demands of tax payers in Nigeria. According to the Joint Tax Board, JTB, as at May 2017, the total number of taxpayers in Nigeria is just 14 million out of an estimated 69.9 million who are economically active. Nigeria’s tax to Gross Domestic Product, GDP, ratio is six percent, one of the lowest in the world (compared to India’s 16 percent, Ghana’s 15 percent and South Africa’s 27 percent. Most developed nations have tax to GDP ratios of between 32 and 35 percents.
– July 6, 2018 @ 15:55 GMT |
Tags: FG set to prosecute Tax Defaulters
