The Federal Government of Nigeria, gave tax defaulters till March 31, 2018, deadline to pay up their taxes or face prosecution. Acting President Yemi Osinbajo disclosed this when signing the Executive Order during the launch of Voluntary Assets and Income Declaration Scheme (VAIDS) at the Presidential Villa, Abuja today Thursday (29/06/2017); in company of Minister of Finance Kemi Adeosun. He also warned all stakeholders to voluntarily declare their assets and income or face the consequences.
He noted noted that the administration had gathered financial intelligence on the assets of Nigerians at home and abroad in the last 15 months and affirm that only 214 people were paying an annual tax of N20 million voluntarily which, according to him, far from the large number of high net-worth people in the Nigeria. Osinbajo, also noted that all those in this category were resident in Lagos, said the Voluntary Assets and Income Declaration Scheme, VAIDS, which Executive Order was signed on the occasion, would create room for defaulters to get registered and pay their taxes between July 1 and March 31, 2018.
The Acting President disclosed that the government had built a database of the assets of Nigerians, including those held in tax havens across the globe, and would go after defaulters after the March 31, 2018, deadline. He warned that anyone who failed to take advantage of this window period will face dire consequences. In his words: “The project has engaged, on retainership, one of the world’s leading assets tracing firms. Nigeria has also solicited for inputs from various nations who have availed us data under the various conventions and treaties which we have signed. “The project has been able to create accurate financial profiles of thousands of Nigerian companies and individuals, which show various levels of non-compliance. “Tax evasion is not just a civil matter, it is also a crime.When people pay taxes, they hold government to account more,” he said.
Nigeria is now party to the Automatic Exchange of Information, which comes into effect in 2018. “This means that Nigeria will automatically have information required to successfully pursue tax evaders across the world. Countries which are party to this agreement include Switzerland, Panama, Bahamas and other tax havens. Additionally, banking information will easily be shared across countries due to newly implemented Common Reporting Standards (CRS).
Specifically, Nigeria will have access to information on beneficiaries and owners of assets held abroad, including tax havens. “Based on information that is now available, our preference is that those that have diverted Nigeria’s resources to tax havens abroad or concealed them in Nigeria should face the full force of the law. ‘’VAIDS will be operated from July 1, 2017 to March 31, 2018. It will be supported by an Executive Order that I will sign into law today. Only 14 million pay taxes On the statistics of tax payers, Osinbajo said: “According to the Federal Inland Revenue Service, the total number of tax payers in Nigeria is just 14 million. Out of this number, 96 per cent have their taxes deducted at source from their salaries. “Only four per cent comply under direct assessment. So, the vast majority of Nigerians do not pay taxes. This is at variance with the structure of our economy where we are estimating that almost 70 million Nigerians are economically active. “That means that only 20 per cent of the people engaged in one form of business or the other are registered and paying tax.
Osinbajo explained that the problem of tax evasion is not limited to only the rich in Nigeria, he added, however, that the nation practised a progressive taxation in which the rich pay more, while low income earners pay less but that everyone must pay taxes.
He announced every Thursday as Tax Awareness Day, with a view to increasing tax education across the nation. He urged the governors to support the programme, saying it would directly impact positively on state revenues as well.
With Nigeria’s tax-to-GDP ratio at 6%, it is one of the world’s lowest, and the VAID Scheme is specifically targeted at taxpayers who have not been fully declaring their taxable incomes/assets, have not been paying the tax due at all and have been underpaying or under-remitting their taxable income. It will cover Federal, State, personal, capital gains, stamp duties, tertiary education and business taxes.
The scheme, is expected to raise the sum of $1 billion, entails the registration, full and honest declaration of previously undisclosed assets and income and gives tax payers the benefit of forgiveness of overdue interest and penalties, and the assurance that they will not face criminal prosecution for tax offences or be subject to tax investigations. VAIDS ushers in an opportunity to increase the nation’s general tax awareness and compliance.
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