By Emma Ujah, Abuja Bureau Chief
Officials of the Federal Government have been meeting to fine-tune the strategies for dealing with tax defaulters from the end of this month.
As learnt, a working group has been established following what is considered an enormous work to be done in that regard.
Those attending the meetings are drawn from the Federal Ministries of Finance and Justice, the Federal Inland Revenue Service (FIRS) and the Economic and Financial Crimes Commission (EFCC).
It was gathered that this became necessary to institute legal action against individuals and companies that refuse to take advantage of the Voluntary Assets and Income Declaration Scheme (VAIDS), part of the measures instituted by government to improve tax collection and provide an opportunity for taxpayers who are in default to voluntarily declare their assets and income and pay taxes due on them and in return obtain some benefits.
It is some sort of amnesty for chronic tax defaulters brought into being via executive order number 004 of 2017. The scheme was designed to take effect from July 1, 2007 but the deadline was shifted to July 2018 to enable more tax defaulters take advantage of the scheme.
The Executive Chairman of FIRS, Mr. Tunde Fowler and top officials of the organization met with the EFCC boss, Mr. Ibrahim Magu and his directors where it was agreed that the two agencies would work with the Finance and Justice Ministries to achieve the objectives of government in that regard.
At that meeting, Mr. Fowler had said, “There are some issues of non-remittance of withholding tax, Value Added Tax (VAT) and Personal Income Tax.“The EFCC has shown support before. When tax defaulters are invited to your office (EFCC), we see result. I don’t know how you do it but we see result.
“Recently, two banks came forward to comply on their own. I think they must have heard words. We want to join forces with EFCC, especially now that VAIDS is nearly over, to make sure that all tax defaulters get lawful treatment.
“I want to let every taxable person in Nigeria know that we are ready to deploy all powers at our disposal to ensure that every tax defaulter is punished according to the law.”
The EFCC boss assured the FIRS team that his men would swing into action to bring offenders to book because, according to him, some taxable persons and corporate organizations deliberately refused to meet their tax obligations.
He added that some banks were collecting taxes on behalf of government without remitting to the treasury.
Giving more insight into the scheme, the Minister of Finance, Mrs. Kemi Adeosun, said that VAIDS embraces all federal and state taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profit Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, Technology Tax and Tenement Rate. It also covers all back taxes for the last six years in line with the statutory periods of limitation under the relevant tax statutes.
She said, “The Voluntary Asset and Income Declaration Scheme is specifically targeted at taxpayers who have not been fully declaring their taxable income/assets; have not been paying the tax due at all; have been underpaying or under remitting; are under a process of tax audits or investigations with the Relevant Tax Authority; are engaged in tax disputes with the Relevant Tax Authority but are prepared to settle the tax dispute out of court; are new taxpayers who are yet to register with the tax authorities; and are existing registered taxpayers who have new disclosures to make.
“It does not matter whether the relevant tax default arose from undeclared assets within or outside the country. If tax should have been paid, the Voluntary Asset and Income Declaration Scheme is providing a once in a lifetime opportunity to declare the tax outstanding and resolve it definitively”.
She added that anyone who participates in the scheme would be free to transfer their assets that they had previously held in nominee and other names into their own name.
“Many Nigerians have lost assets in the course of trying to conceal them from the authorities. Such losses typically occur in the event of death or an urgent need to liquidate assets when required documentation and proof of ownership cannot be provided. The global focus on illicit financial flows is such that global regulations will only become tighter with time, thus this opportunity to regularise ownership of assets should be seized as proper declaration allows assets to be legally and formally held by the true owner”, she stated
“Other advantages for those who participate in the scheme include freedom from prosecution for past tax defaults, as provided in the law.
“Those taking advantage of the Scheme by declaring honestly and fully will be free from prosecution and will qualify for forgiveness of penalties and interest”.
Upon expiration of VAIDS at the end of this month, government will drag those who have evaded taxes and yet failed to take advantage of the scheme to court on charges bordering on economic crimes.
Tax evasion is a crime punishable upon conviction by imprisonment of up to 5 years, while the taxpayer is still liable to pay the tax due with interest and penalties. In most cases, defaulters are subject to a penalty of 10% of the tax due and interest at 21% per annum. In some cases, the penalty is 100% of the tax due and the defaulters’ assets are liable to be forfeited.
Adeosun warned, “Those who fail to take advantage of the scheme and are later found to have under-declared their taxes or assets will be treated as wilful tax evaders and will, therefore, face the full force of the law and will not be shielded by anonymity.”
Boosting tax income
The Minister, who decried Nigeria’s low tax revenues which, according to her, are at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world, said there has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations. These include transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names.
Figures from the FIRS indicate that the total number of taxpayers in the country as of when VAIDS commenced last year was about 13 million. 96 per cent of them were those in paid employment, whose taxes were deducted at source under PAYE. Those who comply with Direct Assessment were only about 4 per cent.
However, with the implementation of VAIDS, figures show an increase in the number of tax payers to 19.3 million. It has also been gathered that local and foreign companies operating in Nigeria are now taking advantage of VAIDS to regularise their tax status.