*Gives defaulting tax payers recipe to regularise tax status
*As national, international punishments await tax evaders
*Plans home sourced financing to limit external borrowing
“During the last eight years, Nigeria has failed to reduce its debt levels despite high oil prices and nominal GDP growth. We have inherited a situation where our debt and underdevelopment are getting worse not better. This cannot continue,” Kemi Adeosun explained.
By Florence Israel, Abuja.
The Acting President, Professor Yemi Osinbajo (SAN), will Thursday 29th June launch the Voluntary Asset and Income Declaration Scheme (VAIDS) outlining the Federal Government’s plan to increase tax awareness and compliance.
The scheme will also grant tax payers a time-limit opportunity to regularise their tax status without penalty.
The plan, to be executed jointly by Federal and State governments, concentrates on the national duty of all Nigerian companies and citizens to pay their taxes, wherever their income is earned, wherever they reside and no matter how rich they are.
The new scheme becomes imperative for many reasons with the following specifics:
● Very low world ranking: Nigeria’s tax-to-GDP ratio is one of the lowest in the world at 6%;
● Poor hardest hit: Tax evasion leaves an unfair burden of payment on those who can afford it least – Nigeria’s poorest people;
● Regulatory change is enabling easier access to information across the world:
– International agreements, effective from 2018, make the exchange of banking information across borders, automatic.
– Nigeria has signed agreements with a number of nations (US, UK, Canada, UAE, Switzerland, Mauritius, Panama and Bahamas) – all of whom have pledged support and cooperation to exchange information on citizens that is relevant for tax purposes;
● Punishment for evasion is severe: All tax evaders – when identified – are subject to the full force of Nigerian and international law:
– Imprisonment of up to five years
– Severe extra penalties – up to 100% of the outstanding tax due, compound interest at 21% per annum, forfeiture of assets
The plan
● One-off opportunity for evaders to avoid the full force of the law – Between 1 July and 31 December 2017 – evaders can regularise their tax status in exchange for immunity from prosecution of tax offences and a tax audit, and be absolved from penalty charges and interest
● Less forgiveness for evaders who delay – evaders who delay participation past 31 December 2017 will be liable for interest on overdue tax balances
● Provision for installmental payment has been built into the scheme
● Experts in place to assist the Federal Government: Expert, international asset tracers and investigative specialists have been appointed to assist the Federal Government in tracing assets held by Nigerians
● In line with other proven, international schemes: Recent, similar schemes in 2016 have been implemented successfully in India, Indonesia and South Africa. VAIDS will bring Nigeria in line with international best practice and contribute to worldwide efforts to tackle corruption
● Much needed funds will be generated and transparently invested – anticipated funds to be raised are at least US$1 billion, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development
In view of this, the Minister of Finance, Mrs Kemi Adeosun, explained the imperativeness of the new initiative.
“During the last eight years, Nigeria has failed to reduce its debt levels despite high oil prices and nominal GDP growth. We have inherited a situation where our debt and underdevelopment are getting worse not better. This cannot continue.
“Neither can the behaviour of some of our richest citizens and multinationals operating in Nigeria – who seem to consider paying tax to be optional. From 2018, international law will make it easier than ever to track these evaders down and punish them.
“This scheme is in line with similar initiatives launched during 2016 in India, Indonesia and South Africa. We know they work, we know it’s the right thing to do and the Treasury desperately needs the money.
“Finally, the proceeds of this scheme will not disappear. We will provide regular updates on the funds collected to date, and how those funds are being put to very transparent use”.
