State Boards of Internal Revenue across the 36 states of the Federation did less job in the ongoing tax amnesty programme of the Federal Government as they collected only 10 percent or N3 billion of the total tax revenue from individuals and companies through the Voluntary Assets and Income Declaration Scheme (VAIDS).
Since last year, Nigeria’s taxman has been looking at many companies tax files, their full time employee with multiple income sources, understated revenues, use of offshore tax shelters, and individuals lifestyles that are inconsistent with tax payments.
It is barely few days to the June 30, 2018 deadline for tax amnesty scheme, and a total of N30 billion has been recovered from individuals and companies under VAIDS, of which the Federal Inland Revenue Service (FIRS) collected 90 percent or N27 billion.
With the record N30 billion revenue, Federal Government has only succeeded in realising only 8.3 percent of the target $1 billion (N360bn) expected tax revenue through the amnesty programme.
President Muhammade Buhari had in April approved the extension of the Voluntary Assets and Income Declaration Scheme to June 30 , making it easier for corporates and individuals that have been defaulting in tax payments to take advantage of this amnesty scheme so as to avoid reputational risk.
The national taxpayers’ database has now increased from 14 million in 2016 to over 19 million in 2018. Federal Government set out to bring in 4 million new taxpayers into the tax net.
The Federal Government has approved the issuance of Declaration Certificates to taxpayers under VAIDS. The declaration certificates, approved by the finance minister, Kemi Adeosun, are to be given to taxpayers who voluntarily declared their previously undisclosed assets and income.
“The robust implementation of VAIDS has seen an increase in the number of tax payers from 13 million before the assumption of office by the President Muhammadu Buhari administration to 14 million in 2016 and 19.3 million in 2018,” Adeosun twitted recently.
The taxman’s stepped up its role as a result of increased desire by Federal Government to shore up tax revenue as Nigeria’s tax-to-GDP ratio at 6percent is one of the lowest in the world, implying tax’s contribution to the economy is low.
“The Taxman derives no joy in closing businesses of tax defaulters. The Taxman’s only desire is to raise funds for the well-being of Nigeria and her citizens,” according to the VAIDS office at the Federal Ministry of Finance.
“The macro importance of mobile money is that it helps to bring people into the taxpaying net,” according to Gregory Kronsten’s team of analysts at FBNQuest in their June 4 note, where they noted that the principal drivers of record increase in the number of taxpayers may “have been computerisation, enforcement steps and the tax amnesty rather than mobile money.”
The Joint Tax Board (JTB) had in a communiqué issued at the end of its 140th meeting held from March 25 to 28, 2018 wants revenue authorities nationwide to ensure that all efforts are made to increase the ratio of national tax revenue to GDP to at least 20 percent by December 31, 2018.
VAIDS is one of the key policies being used by the Federal Government to reposition the Nigerian economy and correct inherited underdevelopment. This tax amnesty scheme is not to persecute individuals and companies but an opportunity for everyone to regularise all their tax irregularities, according to Federal Government, which has also empowered the taxman who has been busy digging into the financial transactions and wealth structures of individuals and corporates.
The Chartered Institute of Taxation of Nigeria in its TaxBits noted that when then acting President, Yemi Osinbajo, signed the Executive Order that ushered in the Voluntary Assets and Income Declaration Scheme, in June 2017, it promised waiver of interest and penalties, among other sweeteners in the course of the programme.
“These waivers are considered the best yet by any tax amnesty programme anywhere in the world as the government has only requested for what should ordinarily have been paid over to its coffers, in terms of taxes. This is analogous to a wealth manager who has only indicated interest in collecting his principal leaving interest and other default charges on transactions of mutual interest.
“The whole idea was to make the tax package juicy enough for tax defaulters to come forward and make their declaration in as honest and complete way as possible further to their call to civic action as provided by Section 24(f) of the 1999 Constitution of the Federal Republic of Nigeria, as amended”, CITN noted.
The way forward, according to CITN is that the clear and unambiguous words of the executive order need to be carried out to the letter.
As part of the implementation of VAIDS, many high net worth individuals (HNIs) and very important personalities (VIPs) have been receiving letters from Ministry of Finance and various State Boards of Internal Revenue Services on their tax status, requesting them to take advantage of VAIDS to regularise their tax status.
As deadline for VAIDS gradually approaches, penalties for non-compliance include: liability to pay in full, the principal sum due, all interest and penalties due (10-100percent of the tax due or forfeiture of related asset); and criminal prosecution in accordance with relevant extant laws, including up to 5 years in jail.
Other penalties facing tax defaulters include withdrawal of any reliefs, which may have been granted to the participant; liability to undergo comprehensive tax audit; and relating to undisclosed information, any sum voluntarily declared may be counted as part payment of outstanding tax. Federal Government insists that tax evasion is one of the easiest cases to prosecute.
The post States revenue boards make paltry impact in Nigeria’s tax amnesty appeared first on BusinessDay : News you can trust .
Official Email: firstname.lastname@example.org