Business
- By Anayo Ezugwu
DESPITE receiving N17 billion from the Voluntary Assets and Income Declaration Scheme, VAIDS, in six months, the federal government is still targeting additional N6 billion before the end of the year. The scheme commenced in July this year.
Babatunde Fowler, executive chairman, Federal Inland Revenue Service, FIRS, who disclosed this in Lagos, at a media workshop on VAIDS, said the scheme had generated enthusiasm among taxpayers, many of whom he said were coming forward to declare previously undeclared incomes. He stated that VAIDS is necessary at this time in the nation’s evolution, particularly with the shrinking of oil revenues.
According to him, the agency will offer free advisory services to taxpayers ready to comply with the scheme. Fowler said taxation is a considerably more reliable source of revenue than oil. He urged those who have earned undeclared incomes to take advantage of the window provided by VAIDS to regularise their tax status.
The workshop featured presentations by tax experts on the role of data in taxation, tax amnesty programmes in other countries and the provision of VAIDS. Fowler added that a total of N17 billion has been realised from the scheme in six months, adding that the scheme is expected to rake in another N6billion before the end of the year.
“I can assure you that we will hand hold you through the process. We will help you through the documentations. Tax administrators are also sensitive; a business that is dead is of no value to a tax administrator. Like the doctor, our aim is to see the patient alive. Our objective is to see the tax payer still growing so if you have nearly filed bankruptcy and you have got a loan to bring the business alive we will make sure that you pay the current taxes and give enough time to pay the backlog.
“I would like us to not have any fear that if you come forward you will be worse off. I asure you that our objective is not killing businesses; we are just trying to bring everybody back into the system for the love of the country and the economy,” he said.
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. 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.
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.
Tax evasion is a crime punishable, upon conviction, by imprisonment of up to five years, while 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 charged.
In some cases, the penalty assessed is 100 percent of the tax due and further, the related assets are liable to be forfeited. Those taking advantage of the scheme by declaring honestly and fully will be free from prosecution and will qualify for forgiveness of penalties and interest. Another benefit of participating in the scheme is that taxpayers will be able to transfer assets that they had previously held by nominees into their own name. It should be remembered that many Nigerians have lost assets in the course of trying to conceal them from the authorities.
Such losses typically occur in the event of death or an urgent need to liquidate assets when required documentation and proof of ownership cannot be provided. The global focus on illicit financial flows is such that global regulations will only become tighter with time, thus this opportunity to regularise should be seized. Declaration allows assets to be legally and formally held by the true owner.
– Dec. 15, 2017 @ 10:57 GMT
Tags: Babatunde Fowler FG targets Additional N6bn Revenue through VAIDS nigeria VAIDS Voluntary Assets and Income Declaration Scheme
