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Business › VAIDS: A Time Limited Opportunity To Regularize Tax Records by Tbpclients(op): 9:38am On Oct 16, 2018

Introduction

Are you aware that the best time to properly put your tax information and records in place with relevant tax authorities is now! I mean now and not later as delaying it, is dangerous!

Before, tax payers with the assistance of their consultants have fully evaded tax payment due to unavailability of adequate and appropriate information about them with the relevant tax authorities (RTA). This facilitates sharp practices such as submitting two different sets of manipulated accounts to the Federal Inland Revenue and State Internal Revenue and concealing vital information from RTA that would ordinarily assist in determining the actual tax liability of a tax payer.

Consequentially, the Government continues to loss significant amount of tax revenue and accounted for the reason why Nigeria’s tax to GDP ratio of 6%, is one of the lowest in the world (compared to Indian’s of 16%, Ghana’s of 15.9% and South Africa’s of 27%). The Government considers the level of tax remittance comparatively low and worrisome despite having some of the most profitable and well capitalized companies in Africa.

Therefore, this present administration made a lot of innovative strategies in tackling tax evasion and avoidance particularly in the area of gathering and providing additional information to tax authorities of taxable person/entity. As the most fundamental tool of tackling illicit financial flows and tax evasion, which has contributed to the country’s underdevelopment is, information gathering technique of the tax authorities.

Accessibility of RTA to more information

The government’s determination to secure additional information of taxable person can be established and substantiated by the international agreements signed with a number of nations. These include Automatic Exchange of Information (AEI). These agreements allow the exchange of information amongst tax authorities of different countries and about financial accounts and investments to assist in ending tax evasion. Additionally, through Common Reporting Standard (CRS) bank account information on individual and certain types of entities can easily be shared across countries.

Locally, the government has put in place, sustainable measures to increase inter-agency co-operation so as to provide additional information to the tax authorities. Reliable and accurate information of taxpayers can now be obtained through the following means by the tax authorities namely; Biometric Verification Number (BVN), The Nigerian Financial Intelligence Unit (NFIU) domiciled within the EFCC, State Lands Registries, and Corporate Affairs Commission (CAC) among others to create an accurate financial profile of Nigeria’s taxpayers.

Meaning of Voluntary Asset and Income Declaration Scheme (VAIDS)

Having compiled taxpayers’ information by the tax authorities, the results suggest that the level of tax evasion and non-compliance to tax rules and regulation is significant therefore the government is providing a time limited opportunity for taxpayers to voluntarily regularize their tax status relating to previous tax periods. VAIDS ushers in an opportunity to increase the nation’s general tax awareness and compliance.

Eligibility

In a simple term, VAIDS is targeted at taxpayers who have skeleton (s) in their tax wardrobe, that is all persons and entities that are in default of their tax liabilities including those who;

• Have not been fully declaring their taxable income/assets
• Have not been paying their tax due at all and or
• Have been underpaying or under remitting
• Are under a process of tax audit or investigation with RTA and/or
• Are engaged in tax dispute with RTA but are prepared to settle the tax dispute out of court.

Benefits of the Scheme

Participants of the Scheme would enjoy benefits which include;

1. Immunity from prosecution for tax offences
2. Immunity from tax audit
3. Waiver of interest
4. Waiver of penalties
5. Option of spreading payment of outstanding liabilities over a maximum period of three (3) years as may be agreed with RTA and
6. Permission to transfer assets that have been previously held by nominees into taxpayers’ name.

Conclusion

Upon the expiration of the VAIDS, Government will commence criminal prosecution of those who have evaded and yet failed to take advantage of the scheme, thus a ‘’wait and see’’ approach would definitely not going to be best option for proactive and informed taxpayers. Advisedly, taxpayers should do the needful and take advantage of the scheme through the assistance of a consultant or risk prosecution.