While the Federal Government considers requests for an extension of Nigeria’s tax amnesty programme, the Voluntary Assets and Income Declaration Scheme (VAIDS), it is not going back on its pledge to prosecute all tax evaders who failed to take advantage of the tax amnesty window to regularise their status.
The tax amnesty programme launched July 2017 by the Federal Government offered a nine-month window till March 31, 2018 for all categories of taxpayers to voluntarily regularise their tax liabilities.
Prior to the expiration of the deadline last Saturday, various categories of persons and groups, including some state governments and private sector operators, requested an extension of the deadline to enable them comply.
Kemi Adeosun, Minister of Finance said last week that the Federal Government was reviewing the requests by the states and the private sector.
“The Federal Government is reviewing the numerous extension requests by states and the private sector, which have cited some logistic challenges, such as non-availability of the declaration forms in some states and the declaration of public holidays to commemorate Easter,” the minister had said, adding that indicted individuals and groups still risk forfeiture of their assets and prosecution.
Federal Government had before this development said the failure of Nigeria’s corporate tax defaulters to leverage the tax amnesty window would only cause them their properties valued at about N2trillion. Federal Government had activated the processes of selling-off these properties once the amnesty is finally over.
The data mining efforts of the Federal Ministry of Finance domiciled in ‘Project Lighthouse’ help identify a new batch of more than 130,000 high net worth Nigerian individuals and companies that have potential tax underpayments.
Tunde Fowler, Executive Chairman, Federal Inland Revenue Service (FIRS) had tweeted saying, “We have properties worth N2trillion 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.”
“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.
The Nigerian 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.
Federal Government aims to raise at least additional $1 billion into its coffers as tax revenue while bringing in 4 million new tax payers into the tax net.
President Muhammadu Buhari empowered the Taxman and he now has the will and the data to go after tax evaders who fail to take advantage of the tax amnesty programme.
The Taxman has 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 has been able to request and receive data from a number of nations including traditional tax havens.
For the overseas data 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 Taxman who has been unearthing tax payers data from 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 FIRS chairman.
Nigeria’s tax-to-Gross Domestic Product (GDP) ratio at just 6percent is one of the lowest in the world compared to India (16percent), Ghana (15.9percent), and South Africa (27percent). Most developed nations have tax-to-GDP ratios of between 32percent and 35percent.
The International Monetary Fund (IMF) in a most recent country report on Nigeria blamed the nation’s revenue administrators for the low tax collection records of 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” 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”, IMF stated.
IMF however faulted 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, saying that it “may not be that effective in delivering higher revenues sustainably”.
“We need investment because our country is growing. We need investment because we need to reposition Nigeria and ensure necessary growth and development. 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 Federal Government had been magnanimous enough by granting the nine months tax amnesty to tax defaulters, so there will be no extension of the tax amnesty programme”, Adeosun said.
“When it comes to tax, there is no APC, no PDP. We have no allegiance to any party. Nigeria needs money. Now we have the data and people now know that we know what they have,” she added.
Nigeria had signed the Multilateral Competent Authority on Common Reporting Standards, which allows for exchange of financial account information. AsoRock had engaged a leading international Asset Tracing and Investigation Agency (Kroll), to trace and track illicit flows and assets.
Iheanyi Nwachukwu
