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President Muhammadu Buhari has approved the extension of the Voluntary Assets and Income Declaration Scheme (VAIDS) to June 30, 2018.
A statement by the Special Adviser to the President on Media and Publicity, Femi Adesina, said, “the short extension after the original March 31 date is based on the appeals of professional bodies and individual taxpayers.”
The President however warned that no further extension of time will be approved after June 30.
The President added that a new date was also given, based on the conviction of the Ministry of Finance that the overall objective to increase compliance will be attained, and additional revenue will accrue.
The statement also said that a fresh Executive Order will be made to give legal backing to the new timeline.
According to Buhari, “for a nation of people who are competitive driven it is not a thing of pride that we are the lowest performer in tax to GDP, not just in Africa, but in the world.”
“Hiding monies overseas, evading taxes by manipulation, and other unwholesome practices, have never developed a country, and for Nigeria to attain her true potential, these must stop.”
Nigeria’s tax-to-Gross Domestic Product (GDP) ratio at just 6percent is one of the lowest in the world compared to India (16 percent), Ghana (15.9 percent), and South Africa (27 percent). Most developed nations have tax-to-GDP ratios of between 32 percent and 35 percent.
The International Monetary Fund (IMF) in a recent country report on Nigeria blamed the nation’s revenue administrators for the low tax collection in Africa’s largest economy.
“The very low tax collection rates in Nigeria are a direct reflection of weaknesses in revenue administration systems and a high level of systemic noncompliance,” the IMF noted.
“Estimates of tax potential from the literature suggest that a non-oil tax capacity of 16 to 18 percent would be optimal for a country with Nigeria’s economic structure and per capita income levels. This estimate implies space for additional tax collection of 12 percent of GDP.”
The Voluntary Asset and Income Declaration Scheme (VAIDS) is a time-limited opportunity for taxpayers to regularise their tax status relating to previous tax periods and pay any taxes due.
The Federal Government aims to raise at least $1 billion into its coffers as tax revenue while bringing in 4 million new tax payers into the tax net.
Aso Rock had engaged a leading international Asset Tracing and Investigation Agency (Kroll), to trace and track illicit flows and assets.
The data mining efforts of the Federal Ministry of Finance domiciled in ‘Project Lighthouse’ is also meant to help identify a new batch of more than 130,000 high net worth Nigerian individuals and companies that have potential tax underpayments.
“We have properties worth N2 trillion belonging to Corporate entities that do not pay tax and we have begun the process of selling them off. At the federal level, about N20 billion has been raised and we have received over 262 applications through VAIDS,” said Tunde Fowler, Executive Chairman, Federal Inland Revenue Service (FIRS).
“We are compiling all the information and data so we can have a central data base to ensure adequate security for people’s information,” Fowler said.
Tax authorities have collected data from a number of sources including land registries of the Governments of Lagos, Kaduna, Kano and Ogun States as well as the Federal Capital Territory (FCT) and also have been able to request and receive data from a number of nations including traditional tax havens.
For the overseas data the Federal Government has used exchange of information protocols. Under these protocols, information relating to bank records and financial filings for tax purposes is obtained from tax havens like British Virgin Islands and Mauritius that are signatories to information sharing agreements.
The FIRS has also been unearthing tax payer’s data using Bank Verification Number (BVN), foreign exchange (FX) application, land registry, company dividends, car registration, Corporate Affairs Commission, and foreign property ownership.
“The focus right now is on those that make substantive amount in Nigeria that have not declared or are underpaying their taxes,” according to the FIRS chairman.
Nigeria has signed the Multilateral Competent Authority on Common Reporting Standards, which allows for exchange of financial account information.
“We need to stop relying on oil and rebuild our revenue base. In order to achieve this we have to fulfill our tax obligations. This is something we must all get right,” said Kemi Adeosun, Nigeria’s Minister of Finance.
The President urged Nigerian companies and individuals to join government in the rebuilding mission, “and do the right thing by taking this window of extension to regularize.”
He added that the right thing may not be convenient or comfortable, “but in the long run, we will all have a nation we can be proud of.”
President Buhari further urged tax authorities to use the extension window to perfect plans to prosecute those who fail to regularize their tax status.
President Buhari had last year launched the Economic Recovery and Growth Plan (ERGP), and the VAIDS tax amnesty a first in the series of reforms that will transform the tax system and provide sustainable predictable funding for all tiers of government.
The IMF however says the current strategy of relying on strengthened collection efforts and one-off initiatives such as the Nigerian Voluntary Asset and Income Declaration Scheme (VAIDS) as a first level intervention, “may not be that effective in delivering higher revenues in a sustainable manner.”
TONY AILEMEN, Abuja
