The Taxman Knows You: Understanding VAIDS In Nigeria
By FSAdmin
INTRODUCTION
Pursuant to the Executive Order No 4 of 2017, The Federal Ministry of Finance was empowered to set up a Voluntary Assets and Income Declaration Scheme (VAIDS) for all categories of taxpayers who have defaulted in payment of taxes due and collectible subject to the fulfillment of the terms and conditions as may be stipulated in the Order
and other subsequent complementary regulations.
VAIDS is a time-limited (9 months) opportunity for taxpayers to regularize their tax status relating to previous tax periods. In exchange of a full and complete declaration, tax payers will enjoy forgiveness of overdue interests and penalties and the assurance that they will not be subject to tax investigations or face criminal prosecution for tax
evasion.
VAIDS COVERAGE
This Scheme covers all Federal and State taxes such as Companies Income Tax, Petroleum Profits Tax, Personal Income Tax, Capital Gains Tax, Tertiary Education Tax, Stamp Duties.
The Scheme is specifically targeted at taxpayers who;
have not been fully declaring their taxable income/assets
have been underpaying or under remitting or
have not been paying tax due at all
All taxable persons and entities including individuals, registered companies, statutory companies, trusts, and executors are covered under this Scheme. It is inconsequential whether the tax default arose from undeclared asssets within or outside the country.
Once tax should have been paid, VAIDS provides an opportunity for tax payers to declare their tax outstanding and resolve it definitely.
DATA MINING: PROJECT LIGHTHOUSE
For over 15 months, a small team of professionals within the Federal ministry of Finance have been working energetically to gather information with a view to understanding the degree of tax compliance in Nigeria. Data was, and is being gathered from a wide range of sources including:
Bank Verification Number (BVN) records.
Nigeria Financial Intelligence Unit (NFIU) records.
Review of ownership of prime properties within Nigeria
Review of Land allocation and land ownership in selected high value areas.
Review of Major payments made by the Federal Government of Nigeria.
Foreign exchange allocation returns and Bureau De Change (BDC) records.
Review of Corporate Affairs Commission (CAC) records.
Review of Central Securities Clearing System (CSCS) share ownership records.
Review of Panama papers/wikileaks records.
Whistle-blower tips.
Review of private jet and yacht ownership information.
It is also noteworthy that Nigeria has realized that tackling the problem of Tax evasion cannot be effectively achieved locally and so has focused on leveraging on global support. In furtherance to this, Nigeria has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (Base Erosion and Policy Shifting).
Furthermore, Nigeria is also a party to the AEOI (Automatic Exchange of Information); the effect of which is that there will be a systematic and periodic transmission of bulk Nigerian taxpayer information by a source country to Nigeria concerning various categories of income and financial transaction. The import of all these is that every tax payer is now bared open to Tax authorities even if such taxpayer carries out transactions or purchases assets outside the country.
BENEFITS OF PARTICIPATING IN VAIDS
This scheme is expected to last only from 1st July 2017 to 31st March 2018 and participants will enjoy the following benefits:
Immunity from Prosecution for Tax offences
Immunity from Tax Audit.
Immunity from Interest and Penalties (It is important to note that waiver from interest and penalties will only be from July 1st to Dec 31st 2017)
Tax payers will be able to transfer assets they had previously held by nominees into their own name.
Opportunity to enter arrangements to pay outstanding tax liabilities in installments spreading up to three years.
Application for TIN will be fast-tracked.\
All information provided by the taxpayer under the Scheme shall be treated with utmost confidentiality in accordance with the provisions of the relevant laws save where it is stated otherwise.
Issuance of a VAIDS certificate to guarantee that taxpayers enjoy all the benefits of the Scheme.
WHAT HAPPENS TO THOSE WHO DO NOT PARTICIPATE?
Taxpayers who fail to take advantage of the Scheme till the scheme period expires will be taken as tax defaulters and will face the full force of the law. These willful tax evaders will be faced with criminal prosecution and the principal sum due in full will be recovered with full penalties and interest. The Federal Government also plans a “Name and Shame” programme to reveal tax evaders identity.
CONCLUSION
As it is, the Taxman knows all. The VAIDS appears to be a once in a lifetime opportunity to enjoy forgiveness of overdue interest and penalties. As such, taxpayers are encouraged to make the most of the time-limited opportunity available under the scheme to declare their incomes and assets and also pay their outstanding tax liabilities to avoid the negative consequences to arise from the tax enforcement processes which the various tax authorities will implement when this Scheme elapses.
Dayo Adu – dayo.adu@famsvillesolicitors.com
Ahmed Omolola – Omolola.ahmed@famsvillesolicitors.com www.famsvillelaw.com
