…As NEC plans extraordinary session to discuss security of the country
The Federal Inland Revenue Services (FIRS) is targeting an increase in tax contribution to the Gross Domestic Product (GDP) to eighteen percent by 2020.
This will be done through a Voluntary Asset and Income Declaration Scheme (VAIDS) approved by the National Economic Council on Thursday which is expected to generate US$1 billion as revenue. Non-oil tax currently accounts fro only 6% of the country’s GDP.
The VAIDS scheme is expected to simultaneously generate revenue and encourage investment and economic activity as only 214 individuals in the entire country pay N20 million or more in tax annually, Tunde Fowler, Director General of the FIRS told newsmen at the State House at the post-NEC briefing.
“VAIDS scheme targets to increase the tax to GDP ratios to 18% from just 6% by 2020” Fowler told BusinessDay stating that the FIRS can actually surpass NEC’s projected 15%.
He said only 14million Nigerians out of 40 million eligible taxpayers currently pay tax.
A conservative revenue of US$1billion is expected to be generated from the scheme, Fowler said adding that the VAIDS scheme will embrace all Federal and States’ taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, Technology Tax.
It is expected to cover all back taxes without any limit to time on how far back a tax assessment can go where a taxpayer has wilfully defaulted. The scheme which is expected to run from May 1, 2017, for up to 6 months will have incentives in place to encourage early participation. Under the scheme, taxpayers will be allowed up to 3 years to settle their liabilities.
“It is anticipated that at least 50% of the funds recovered will belong to States who are the ultimate collectors of personal income taxes. A MoU will be gazetted and signed with each State Government”
Fowler who briefed alongside the Abia state governor Okezie Ikpeazu and Kaduna state deputy governor Bala Bantex, said.
The approval of the scheme came following a briefing by the Minister of Finance, Kemi Adesoun at the National Economic Council meeting where she decided the underpayment of tax via the use of Tax Havens and other evasion strategies which have not been helpful to Nigeria.
According to Fowler, this practice has been principally perpetrated by multinational companies and high net worth individuals, keeping Nigeria as a country with the lowest non-oil tax to GDP at 6%.
“The proposed Nigeria Voluntary Asset and Income Declaration Scheme (VAIDS) will capitalize on the considerable international goodwill built by President Buhari in his mission to rebuild Nigeria,” he said.
The scheme is also expected to capitalize on the current global movement against tax evasion and illicit financial flows and offer a window for those who have not complied with extant tax regulations to remedy their position by the provision of limited amnesty to enable voluntary declaration and payment of liabilities.
The Finance minister also reported to Council that the balance in the Excess Crude Account (ECA) as at 15th March 2017 stood at US$2,45,864,724.59, recording a marginal increase of US$2,458,382,882.03. The ECA balance does not reflect the decision of Council last month to deduct $250 million for injection into the Sovereign Wealth Fund.
She also briefed the council on the Stabilization Fund Account (SFA) is an account which is equivalent to 0.5% of the Federation Account. The Finance Minister informed Council that the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) recently approved for disbursement (N39,613,282,870.69) to a number of States. She said the stabilization fund now stands at N25,793,400,290.00.
Council also deliberated on the need to accelerate and review the extant National Forest Policy as well as ensure its backing through the enactment of relevant Forest Laws.
Ikpeazu said council recommended massive afforestation/reforestation of degraded forests and landscape outside Forests and the establishment of take-off of the National Forestry Trust Fund through contributions by Wood Products Exporters according to products classification (tally processed, semi-processed, charcoal) etc.
It also recommended the establishment of National Forest Model Estate in all the States and FCT, Improvement in forest governance and establishment of National Taskforce to effectively protect the forest Estate/Reserve as well as effective monitoring, evaluation, documentation of trade in wood and wood product.
This is as Council members plan an extraordinary session to discuss security matters especially as it relates to the economy. Bantex told newsmen that the decision to hold the session came following a briefing from the National Security Adviser, Babagana Mongonu on the Security situation in the country with particular reference to: Boko Haram insurgency in the North-East, cattle rustling, ethnic militias/security outfits, Kidnapping, Armed robbery, Militancy in Niger Delta and proliferation of small arms across the country. The NSA fingered unemployment as the major threat to security.
