Executive Order Report: The Acting President Professor Yemi Osinbajo (SAN) signed an Executive order No. 004 of 2017 on Tax Matters on the 29th day of June 2017. The Executive order came into effect on the 1st of July 2017 and is to expire on the 31st of March 2018. By virtue of this order, the Acting President Professor Yemi Osinbajo (SAN) authorized the federal and state government to allow defaulting taxpayers to voluntarily declare their asset and income, pay due taxes and obtain some benefits in return. This Executive order promulgated the Voluntary Asset and Income Declaration Scheme (VAIDS) hereinafter referred to as “the scheme”.
The scheme guarantees amnesty for voluntary tax defaulters; and is also part of government’s effort to increase tax awareness and compliance. It also grants tax payers a time limited opportunity to regularize their tax status without penalty. The scheme also focuses 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.
By virtue of this scheme, tax payers are also offered a nine months grace period to regularize their tax status or face criminal prosecution for tax offences. This scheme is specially targeted at taxpayers, who had not declared their taxable incomes and assets, as well as those who don’t pay at all, and those who had been underpaying or under remitting. The scheme covers all federal and state taxes such as companies’ income tax, personal income tax, petroleum profit tax, capital gains tax, stamp duties, Technology Tax and tertiary education tax.
By virtue of this scheme also, if tax payers give full and honest declaration, they will receive immunity from prosecution, forgiveness of penalty and interest that is due on unpaid taxes. They will also get the full assurance that all information provided will remain confidential. In addition to this, participants in the scheme will not be selected for audit investigation for the period. Reading from the executive order, it also appears that the scheme has built in a system that will allow those owing to pay over a period of time as some tax payers may have problems raising funds. Those who fail to take advantage of the nine months grace period would face criminal investigation and if found guilty may face up to five years jail term.
The government would immediately commence a nationwide sensitization of Nigerians on the scheme and tax in general to ensure compliance.
By virtue of this scheme, the Federal Inland Revenue Service (FIRS) and every state government is to organize sensitization events that would raise awareness of the tax system to ensure massive enrolment of new tax payers.
By virtue of this scheme, Nigeria is now a party to the automatic exchange of information which comes into effect in January 2018 and by this, this means that Nigeria will automatically have all the information to successfully pursue tax evaders across the world specifically information on beneficial owners of assets held abroad, including those in tax havens. The Scheme is in line with global best practices on disclosure of information and declaration of assets. This I must say is well addressed by the Acting President Professor Yemi Osinbajo (SAN).
The Voluntary Asset and Income Declaration Scheme (VAIDS).
The Voluntary Asset and Income Declaration Scheme is a scheme which encourages the voluntary disclosure of previously undisclosed asset and income for the purpose of payment of all outstanding tax liabilities. The scheme offers a limited waiver for declaration within the specified period of time. The scheme came into existence on the 1st of July 2017 and is to expire on the 31st of March 2018.
Aim and objectives of the Voluntary Asset and Income Declaration Scheme (VAIDS).
The main aim of the scheme is to encourage tax compliance from individuals and companies thus increasing the tax revenue. The scheme also encourages compulsory disclosure of undisclosed assets and income for the payment of outstanding tax liabilities especially for the High-Networth Individuals (HNI’s). These individuals get a chance to voluntarily redeem their past tax obligations and prosecution provided they act within the time frame given.
It also aims at discouraging tax evasion and the use of Tax Haven.
It also aims at increasing tax to Gross Domestic Product (GDP) of the country from 6% to 15% by 2020 and very soon, the Senate would pass whatever legislation needed to improve tax compliance in Nigeria.
It also aims to broaden the Federal and state tax bracket as investigation shows that only 214 individuals nationwide pay =N= 20 Million or more on tax annually.
It also aims to curb non compliance with existing tax laws and discourage the use of tax havens It also aims to collaborate with foreign governments where assets and illicit funds are likely to be held by Nigerians. The Nigerian government will leverage on various international agreements including the recently ratified Convention on Mutual Administrative Assistance in Tax Matters which has been signed by over 100 countries.
Impact of VAIDS on the Nigerian economy
The main impact of the scheme on the economy is that it will boost revenue in Nigeria and make the government accountable to its Nigerian Citizens.
Conclusion:
In conclusion, I must say that this is a good initiative and it is high time we advocated for a change, by increasing the level of tax consciousness of the Nigerian citizens and change the existing tax structure. Contact Us for More
BY
FRANCISCA OLUREMI DAWODU.
LEAVE A REPLY