FG to launch new tax initiative, VAIDS June 29

.To raise at least $1bn from scheme

The Federal Government has announced that it would launch a new tax awareness and mobilisation initiative known as Voluntary Asset and Income Declaration Scheme (VAIDS).

With this initiative, Nigeria’s economic diversification effort has shifted to revenue mobilisation which would limit external borrowing by raising financing locally.

The Federal Ministry of Finance at the weekend stated that the Acting President, Yemi Osinbajo would launch the scheme on June 29, 2017.

The initiative would outline Federal Government’s plan to increase tax awareness and compliance, and grant tax payers a time-limited opportunity to regularise their tax status without penalty.

The Federal Government said that the anticipated fund to be raised is at least US$1 billion, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development.

The plan, which would 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.

Nigeria’s tax-to-GDP ratio is one of the lowest in the world at 6%; and tax evasion leaves an unfair burden of payment on those who can afford it least – the poorest people in the country.

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.

The Daily Times recalls that Nigeria has signed agreements with a number of nations such as US, UK, Canada, UAE, Switzerland, Mauritius, Panama and Bahamas all of whom have pledged support and cooperation to exchange information that is relevant for tax purposes on citizens.

Accordingly, all tax evaders, when identified shall be subjected to the full force of Nigerian and international law with an imprisonment term of up to five years.

There would be a severe extra penalties up to 100% of the outstanding tax due, compound interest at 21% per annum as well as forfeiture of assets.

Tax evaders are therefore given a one-off opportunity between July 1 and December 31, 2017 to 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.

Also, evaders who delay participation later than December 31, 2017 will be liable for interest on overdue tax balances; a provision for installmental payment has been built into the scheme.

Experts, international asset tracers and investigative specialists have been appointed to assist the Federal Government in tracing assets held by Nigerians across the globe.

Similar schemes in 2016 had 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.

Minister of Finance, Mrs. Kemi Adeosun, 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 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.”