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Tax evaders have two months left to pay through VAIDS or risk severe punishment — FG

By Emma Ujah, on 21/05/2018

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•Finance Minister, Kemi Adeosun
•Finance Minister, Kemi Adeosun

 

The Federal Government launched the Voluntary Asset and Income Declaration Scheme (VAIDS) on June 29, 2017 to address the problem of low tax compliance in the country and to generate the much-needed revenue for public expenditure.

The launch was greeted with mixed feelings, with some people questioning the rationale behind granting amnesty to tax evaders, while others considered the initial nine-month deadline for compliance too long. The scheme outlined government’s plan to grant tax payers a time-limited opportunity to regularise their status without penalty.

The plan, being executed in collaboration with 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.

It was predicated on a low six per cent tax to Gross Domestic Product (GDP) ratio, considered one of the lowest globally.  It has been designed to raise the ratio to about 15 per cent by 2020, just two years from now. Another basis for the scheme is that tax evasion leaves an unfair burden of payment on those who can afford it least – Nigeria’s poorest people. 

Taxation is generally considered a fair means of wealth redistribution as high net worth individuals pay higher than low-income earners. VAIDS provides a one-off opportunity for evaders to avoid the wrath of the law. Between July 1 and December 31, 2017, evaders were encouraged to regularise their tax status in exchange for immunity from prosecution, tax audit and be absolved from penalty charges and interest.

Evaders who delayed participation beyond December 31, 2017 were projected to pay interest on overdue tax balances. Those willing to participate could enter into an arrangement to pay in instalments of several tranches. The Minister of Finance, Mrs. Kemi Adeosun, explaining the scheme, noted that the behaviour of some of the nation’s richest citizens and multinationals operating in Nigeria, who seemed to consider paying tax to be optional, could no longer be tolerated.

No hiding place

The Federal Government has, meanwhile, signed data exchange agreements with several countries including the United States (US), the United Kingdom (UK), Canada, United Arab Emirates (UAE), Switzerland, Mauritius, Panama and Bahamas. 

These are some of the countries that some wealthy Nigerians are said to have both cash and houses hidden. Under the agreements, there is an exchange of banking information on cash and assets such as landed properties owned by Nigerians in those countries. This strategy has created a “no hiding place” challenge for tax evaders residing in Nigeria or abroad. 

The Federal Government has also put in place a data mining mechanism to fish them out. It is expected that at least US$1 billion (about N360 billion) could be raised from the scheme which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development.

Speaking at its launch, the Minister of Finance, had said, “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 is 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 in 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.”

In a recent address, Mrs. Adeosun said, “The unique cooperation between the various arms of the Federal Government and foreign governments has provided an unprecedented level of data that allows the Nigerian government to profile taxpayers accurately and identify those whose lifestyle and assets are not consistent with their declared income.

“A lot of data mining is going on daily, both locally and internationally, on property ownership and other items. Data is an extremely powerful tool that is now being utilized. For instance, we have reviewed all companies that received major payments from the Federal Government in the last five years and found that even those who made money from government under-declared.

“On personal income taxes, we reviewed property and company ownership as well as registration of high value assets and foreign exchange allocations, which gives us a sense of the lifestyles of the persons.

“But again, we found major non-compliance. In some cases, people declared as little as N10 million as income but purchased expensive property overseas and in Nigeria, registered high specification vehicles and funded luxurious personal events costing multiples of the declared income”.

Looming prosecution/severe punishment

Those who ignore VAIDS risk criminal prosecution as from July 1, 2018. Severe punishment is planned for tax evaders at the end of the amnesty period as they face imprisonment of up to five years, severe extra penalties – up to 100% of the outstanding tax due – compound interest at 21% per annum as well as forfeiture of assets Mrs. Adeosun told journalists, penultimate Friday, that government officials had been working assiduously, preparing cases against tax evaders which would begin in July. (Vanguard)

Source News Express

Posted 21/05/2018 05:12:24 AM

 

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