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Wednesday, October 22, 2018/05:30PM/Deliotte
The Federal Government of
Nigeria, on 8 October 2018, signed a new Executive Order 008 (Order) backing
the implementation of the Voluntary Offshore Assets Regularisation Scheme
(VOARS or the Scheme), aimed at combating money laundering and tax evasion. The
Scheme took effect from 8 October 2018 and will cover a period of twelve
months.
Under VOARS, Nigerian
taxpayers who hold offshore assets and generate offshore incomes are encouraged
to voluntarily and truthfully declare those assets and incomes for which no
prior taxes were paid, and make a one-time payment of 35% on the total value of
the offshore assets or undergo a forensic audit of the offshore assets and pay
all outstanding taxes, including penalties and interest. In exchange for
participation in the Scheme, the defaulting taxpayers will enjoy immunity from
prosecution for tax offences and offences related to the offshore assets.
Defaulting Nigerian taxpayers
who fail to take advantage of the Scheme will be required to undergo
investigation and enforcement procedures concerning offshore assets held by
them upon the expiration of the Scheme. This will be based on information
obtained by the government through automatic exchange of information between
Nigeria and foreign countries where the assets are located.
The Scheme is open to all
persons, companies and their intermediaries holding offshore assets and are in
default of their tax obligations, including those who are not already under
investigation by law enforcement agencies in Nigeria or any other country and
those who have not been charged with any crimes (ranging from theft of public
funds to obtaining the assets through corrupt practices). The Federal
Government intends to set up a VOARS in Switzerland for all categories of
taxpayers who have defaulted in declaration of their offshore assets and
payment of taxes due further to the terms and conditions of the Order.
It will be recalled that the
Federal Government introduced a somewhat similar amnesty scheme in 2017 –
Voluntary Asset and Income Declaration Scheme (VAIDS), which enjoyed large
participation leading to significant increase in tax revenue, expansion of the
tax net and increased voluntary compliance with tax obligations. VOARS is
therefore expected to have a similar effect while also facilitating the
regularisation of offshore assets connected to Nigeria.
While this is a good
development, implication of VOARS on taxpayers that took advantage of the VAIDS
Scheme is unclear. It is also not clear what period the assessments would cover
and how far back the audits and investigations would go. We expect that the
Federal Government will provide more information that will clarify these issues
as soon as practicable.
In the meantime, taxpayers are
advised to review the components of their offshore assets and incomes to
ascertain potential tax exposures that may arise therefrom and settle any
outstanding taxes or take advantage of the Scheme by making a one-time payment
of 35% on the total value of the offshore assets.
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