INSIGHT INTO THE EXECUTIVE ORDER ON TAXES, ASSETS DECLARATION
The Acting President, Prof. Yemi Osinbajo, on Thursday, the 29th of June, 2017 signed another Executive Order to strengthen the Voluntary Asset and Income Declaration Scheme (VAIDS), a scheme led by the Federal Ministry of Finance.
The Nigerian Voluntary Asset and Income Declaration Scheme (VAIDS) is a time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods and pay any taxes due.
Nigeria has a total of 69.9 million economically-active individuals but only 14 million of such people are tax payers — 96% of these have their taxes automatically deducted through the Pay As You Earn (PAYE) system and 4% comply by paying willingly. Only 214 Nigerians pay 20 million Naira or more in taxes annually. All of them are based in Lagos.
The Scheme shall provide a nine (9) month period commencing from the 1st of July 2017 for taxpayers who are defaulting on their tax liabilities to declare their assets and income from sources within and outside Nigeria relating to the preceding six (6) years of assessment.
Upon the expiration of VAIDS, Federal Government will commence criminal prosecution of tax evaders who refused to take advantage of the income declaration scheme.
The Scheme shall encourage and provide an opportunity for eligible taxpayers to:
- Regularise their tax status for all the relevant years;
- Pay all outstanding taxes;
- Prevent and stop tax evasion; and
- Ensure full tax compliance.
The Scheme is open to and targeted at all persons and entities that are in default of their tax liabilities in any way whatsoever, including those who:
- Earn an income or own assets but are yet to register with the relevant tax authorities;
- Are registered taxpayers who have additional disclosures to make or need to amend prior disclosures; and/or are registered but have not been filing returns;
- Have not been fully declaring their taxable income and assets;
- Have been underpaying or under remitting;
- Are under a process of tax audit or investigation with the relevant tax authority; and/or
- Are engaged in a tax dispute with the relevant tax authority but are prepared to settle the tax dispute out of court.
Any taxpayer who truthfully and voluntarily declares his assets and income, complies with the regulations and guidelines and pays all outstanding taxes shall obtain immunity from prosecution for tax offences; immunity from tax audit; waiver of interest; waiver of penalties; and an option of spreading payment of outstanding liabilities over a maximum period of three years as may be agreed with the relevant tax authority.
On the other hand, any defaulting taxpayer who fails to truthfully and promptly take advantage of this Scheme shall be, at the expiration of the Scheme, liable to pay in full, the principal sum due; liable to pay all interest and penalties arising therefrom; liable to be prosecuted in accordance with relevant extant laws for tax offences; liable to undergo comprehensive tax audit. In addition, there shall be a withdrawal of any reliefs, which may have been granted to the participant and any sum paid in relation to the Scheme may be counted as part payment of any further outstanding tax in respect of undisclosed information.
Furthermore, the Federal Government has declared every Thursday from June 29, 2017, Tax-Thursday. Thursdays have henceforth been set aside for tax enlightenment and awareness.