Acting President Prof Osinbajo today declared Nigeria’s Voluntary Assets and Income Declaration Scheme (VAIDS) open.
The presidency clarified that the scheme will become effective July 1. Acting President Prof Osinbajo also signed an Executive Order backing the Voluntary Assets & Income Declaration Scheme. The National Executive Council (NEC) earlier approved in principle, the implementation of a Voluntary Assets and Income Declaration Scheme (VAIDS). The Scheme encourages voluntary disclosure of previously undisclosed assets and income for the purpose of payment of all outstanding tax liabilities. The Scheme will offer a limited waiver for declaration within the specified period of time. The Scheme is expected to help expand Nigeria’s tax base and therefore improve the low tax to Gross Domestic Product [GDP] ratio currently about 6%. It also seeks to curb the use of tax havens for illicit fund flow and tax avoidance. Voluntary Assets and Income Declaration Scheme (VAIDS) is applicable to individuals resident in Nigeria and companies operating in Nigeria. However, the primary targets are multinational enterprises and high net worth individual.
The disclosure requirements would be in respect of all taxes payable to all levels of government – federal, state and local government taxes includingCompanies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax and Technology Tax.
The Scheme aims to address tax evasion and illicit financial flows particularly by individuals. Any taxpayer who fails to embrace the voluntary disclosure Scheme will be investigated and if found culpable will be prosecuted in addition to full payment of tax due including penalty and interest.
Some of the objectives of the The Voluntary Assets and Income Declaration Scheme (VAIDS) include: Increasing Nigeria’s tax to GDP ratio from 6% to 15% by 2020, broadening the Federal and State tax brackets, Curbing non-compliance with existing tax laws and discouraging use of tax havens and the attendant illicit financial flows and tax evasion.
The Voluntary Assets and Income Declaration Scheme (VAIDS) would grant some waivers as a reward for voluntary declaration of assets and payment of tax liabilities. The Scheme is in line with global best practices on disclosure of information and declaration of assets.
A similar scheme was adopted in India which resulted in the addition of over 350,000 individuals to the tax net yielding approximately US$1.2 billion. There will be collaboration with foreign governments where assets and illicit funds are likely to be held by Nigerians. Government will leverage on various international agreements including the recently ratified Convention on Mutual Administrative Assistance in TaxnMatters which has been signed by
over 100 countries.
The Finance Ministry recently disclosed that Only 214 individuals nationwide pay N20 million or more in tax annually.
It is estimated that the Voluntary Assets and Income Declaration Scheme (VAIDS) would generate approximately USD1 billion in tax revenues.