Abuja, Nigeria, December 15, 2017//- – Federal government recently revealed its seriousness in tracking and punishing tax defaulters after it revealed its intention to seize 2, 000 Abuja properties and resell them.
The property belongs to some firms who failed to disclose their assets under the Voluntary Assets and Income Declaration Scheme (VAIDS).
Explaining this development, Babatunde Fowler, the Chairman of Federal Inland Revenue Service (FIRS), revealed the plan to secure court orders to sell them off.
He stated this at a media workshop on VAIDS held by the FIRS, recently. “We will sell off the 2,000 properties and give the companies the change after deducting what belongs to the government as tax,” Fowler said.
VAIDS is a time limited opportunity for tax payers to regularize their tax status relating to previous tax periods.
In exchange for declaring previously undisclosed assets and income, tax payers will benefit from the forgiveness of overdue interests and penalties and the assurance that they will not face criminal prosecution for tax offenses or be subjected to tax investigations.
According to its planners, VAIDS offers an opportunity to increase the country’s awareness on tax remittances and also swell its financial base. By the plan, the scheme will run from July 1, 2017 to March 31, 2018.
The plan comes at a time when Nigeria’s tax to GDP ratio is the lowest globally at just six percent. Offering tax amnesty, as response is however, not peculiar to the country. For instance, countries like Indonesia, Germany, Belgium, Turkey, Russia, Greece and Australia have all implemented tax amnesty in the past. Till date, Indonesia’s experience is regarded as the best in terms of impact after it succeeded in capturing over 965, 983 tax payers and helped repatriating offshore assets into the country to help its economy.
But going into this project, it was learnt that government has created multiple data gathering forum from which to draw reliable information on assets and earnings of Nigerians living in the country and outside.
According to Efe Omorodion, ICT Projects Manager, FIRS, there are multiple silos of data sited in multiple data centers across the country under the stewardship of several MDAs. But because of the lack of substantive collaboration, authenticity, integrity and accuracy of compilation, they cannot be properly achieved.
“Before now, there was a lack of an industry and agency wide intelligence on financial and economic activities of tax payers and potential tax payers which has inhibited the efforts to drive an effective tax compliance regime,” says Omorodion.
“However, with the current data harmonization initiative sponsored by the vice president’s office, we can see the spotlight, though far, but visible,” he said.
National Identity Management Corporation, NIMC, has 24 million registered persons on its database. Also, NIMC has received 9.3 million BVNs from NIBSS of which there is a 40% match to its existing records; NIMC has begun direct integration with several key data points like INEC, immigration, NCC and so on.
For those earning income in the country from offshore income generating properties and assets, Nigeria’s membership of the AEOI framework allows it to track such incomes.
AEOI would provide timely access to information on demand and would detect cases of non compliance as country tax authorities can perform required checks.
“It is highly imperative that taxpayers declare their assets and income honestly. Tax Authorities now have the required data and business intelligence to verify submissions from diverse data sources. Falsification and hiding information is not tax planning,”!
But that will change with VAIDS as solution.
VAIDS ushers in an opportunity to increase the nation’s general tax awareness and compliance.
Any tax payer who truthfully and voluntarily declares his assets and income, complies with the regulations and guidelines and pays all outstanding taxes shall obtain the accruing benefits that VAIDS provides.
All these data from identified sources would provide the required findings for the Tax Authority to verify income and assets declarations and overall level of tax compliance.
Still under the VAIDS, Federal government says that as much N17 billion, tax money, have been remitted by five companies in less than five months since its kick-off after business entities began making voluntary declaration of tax previously evaded.
INDEPENDENT also gathered that under VAIDS, the Federal Inland Revenue Service, FIRS, and other tax agencies now have a reliable data bank with which to track income yielding assets of all residents in the country whether citizen or foreign national.
Fowler, executive chairman, FIRS, said that the N17 billion tax remittance under VAIDS is meager compared to what is still being expected to be plowed in by the scheme.
“We expect more remittances to be made because this is just what we got from only five companies. There are about six more companies who have made declarations but have yet to make remittances on what they owe,” said Fowler.
The tax chief, further breaking down the figure explained that part of the N17 billion included $50 million remitted by one or two companies that owed tax.
Also, the scheme hopes to capture residents in Nigeria but whose earnings/income generating assets falls outside the country. In this instance, the transnational tax tracking network will help VAIDS properly evaluate the tax dues of resident in foreign country, make necessary waivers if a previous deduction was made in the country where the assets are located.
Still on VAIDS, it was also learnt that the tax shelter now covers all income earners and all incomes including those obtained from worship centers like Mosques and churches. Explaining further on this, Albert Folorunso, Managing Consultant, Pedabo and Associate Limited and also speaker at the Abuja workshop, said that the scheme is meant to capture all income earners and business entities. “We are not taxing churches or mosques. All we are saying as that if a church or mosque engages in business it should pay company income tax. And if a pastor or an imam earns a salary from his church or mosque he should pay tax to government,” Folorunso said.
While the plan may attract controversy after similar attempt was made by the Financial Reporting Council, FRC, of Nigeria, earlier in the year, there may well be basis for such plans to have VAIDS cover this uncharted tax remittance territory.
According to an audit in 2013, an estimated $178 billion believed to be annual remittances to Not-For-Profit Organisation, NFPO, which included churches and other worship centers are not captured in the national GDP.
FRC, had attempted to force all organization within the category to report earnings appropriately which led to a controversy that prompted the prompt sack of the then FRC chief operating officer, Jim Obazee.
Implementation of the code was part of an international accounting standards requisition if the country must attract international investors.
Independent.ng
