The National Executive Council (NEC) in Nigeria, recently approved in principle, the implementation of a Voluntary Assets and Income Declaration Scheme (VAIDS), which came into effect in May 2017.

The new scheme encourages voluntary disclosure of personal assets and income for the purpose of identification and payment of all outstanding tax liabilities. The Scheme will offer a limited waiver for declaration within the specified period of time.

It is expected to help expand Nigeria’s tax base and therefore improve the low tax to Gross Domestic Product (GDP) ratio, which is currently about 6%. It also seeks to curb the use of tax havens for illicit fund flow and tax avoidance.
The Scheme also aims towards broadening the Federal and State tax brackets. Sadly, Only 214 individuals pay tax, which amounts to N20million or more annually.

However, while commending the idea behind VAIDS, it still needs certain improvements such as;
a. Awareness/Sensitisation
b. Investigative measures
c. Application and participation process
d. Licensed independent VAIDS offices
e. Common reporting standards

AWARENESS
The term ‘Voluntary Assets and Income Declaration Scheme’ is not yet common to Nigerians and only a few are aware of VAIDS. The best approach would be engage in more sensitisation campaigns to improve the rate of VAIDS awareness among Nigerians. Sensitisation strategies could include the following;
1. Periodic Sensitisation Programmes.
2. Working with telecommunication organisations to aid VAIDS awareness.
3. Distribution of handbills summarising the concept of VAIDS.


INVESTIGATIVE MEASURES
Section 47 of the Federal Inland Revenue Establishment Act provides that the tax authority may give adequate notice to appropriate organisations for full information on a person’s income or gain. Although VAIDS is voluntary, there could also be instances where full disclosure is not made. Hence, the Scheme should be applied to suit the provisions of FIREA, so as to give room for tax authorities to investigate, where it observe false asset declaration.

PARTICIPATION PROCESS
The Scheme has failed to address the participation procedures. To make the declaration of assets and income completely voluntary, steps must be taken to address the process of participation.
However, participation process should be made less tedious to encourage large participations
This process could be addressed:
a. by placing officials from street to street within a defined period of time to register intending participants.
b. by also giving options for individual online registration. Hence, the online registration should be easy and made phone enabled.

LICENSED INDEPENDENT VAIDS OFFICES
In order to encourage large participation in the Voluntary and Assets Declaration Scheme, licensed independent VAIDS offices established by permitted individual should be allowed within the VAIDS policies.

COMMON REPORTING STANDARD (CRS)
Under the CRS, information are to be reported by Financial Institutions (FI) with respect to account balance, interest dividends, rental income and other income generated with respect to assets held in account or payments made to the account, and residence of tax payer.
Countries that have committed to this initiative automatically exchange information among Financial Institutions and tax authorities in agreed format. Hence, this may be employed to make VAIDS effective.

Conclusively, VAIDS as an Executive Order may be better improved by taking into account the population of Nigerians and companies operating in Nigeria for the purpose of carrying on businesses.

Written by VICTOR OTORI ESQ
; reviewed by TAXAIDE PROFESSIONAL LTD