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Achieving Voluntary Tax Compliance: The VAIDS Option


Monday, February 26, 2018 / 04:35 PM / FIRS, Tunde Fowler 

”Great Economies and Great Nations, Prosperity and  Abundance of Nations and Communities are Created by Men not Spirits.”  - Vice President, Federal Republic of Nigeria Prof. Yemi Osinbajo SAN GCON 

  • All tiers of Government Require Revenue to Provide Infrastructure for Sustainable Growth
  • Oil being the Major Source of Revenue in the Past
  • Need for Diversification of the Economy and Growth of Non-Oil Tax Revenue
  • Private Sector Significantly Drives the Economy
  • Linkage between Voluntary Tax Compliance and Economic Growth/Development

What is VAIDS?
VAIDS is an acronym for Voluntary Assets and Income Declaration Scheme. It is a project initiated by the Federal Government of Nigeria which is aimed at providing an opportunity for corporate and individuals to regularize their tax status relating to previous tax periods. 

Under the scheme, taxpayers were given the opportunity to benefit from total waiver of outstanding and overdue interests and penalties. They also stand  be the beneficiaries of the assurance that they will not face criminal prosecution for tax offences or be subjected to further tax investigations.

To profit from the scheme, taxpayers will be required to fully and honestly declare previously undisclosed assets and income.

In addition to raising tax revenue for the period of its  operation, VAIDS will provide an opportunity to increase general tax awareness and compliance among the general public.

Important things to know about VAIDS

1. It is a time limited opportunity.
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2. ALL taxes (Federal and State) are Covered
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3. Up to three (3) Years Instalment Plan subject to agreement with Revenue Authority

The key motivation for introducing the scheme is that in spite of the fact that Nigeria has some of the most profitable and well capitalized companies in Africa, the tax remittance rate is still low. 

Nigeria’s low tax revenues are inconsistent with the lifestyles and spending habits of a large number of citizens. Many are engaged in transfer of assets overseas, use of offshore companies in tax havens and registration of assets in nominee names.

Tax evasion is a significant challenge. Some of the ways in which it is perpetrated are:

  • Manipulation of accounting records
  • Use of complex structures for  transactions
  • Non registration for VAT and non remittance after charging
  • Non payment of CGT on assets disposal
  • Escaping detection of income due to lack of machinery for tracing such

According to the Joint Tax Board, there were only 14 million taxpayers in Nigeria as at May 2017, compared to an estimated 69.9 million economically active people while our tax to GDP ratio is rather poor at 6%.

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Practical Guidelines for Participating in VAIDS

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The Benefits of VAIDS
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Tax Amnesty – 45 Days Window (4th October 2016 – 25th November 2016)
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Project LighthouseThe Ministry of Finance in collaboration with Relevant Tax Authorities is building a revenue assurance platform through the rigorous gathering of data from a wide range of sources including: 

  • Bank Verification Numbers (BVN)

  • Nigerian Financial Intelligence Unit (NFIU) Records

  • Corporate Affairs Commissions (CAC) Records

  • Land Allocation and Land Ownership Records

  • Foreign Exchange Allocation Returns and Bureau De Change (BDC) Records

  • Central Securities Clearing System (CSCS) Share Ownership Records

  • Information from Foreign Governments and Whistleblower tips/leaks

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Automatic Exchange of Information for Tax Purposes
– Nigeria being a signatory to the Multilateral Competent Authority Agreement of the OECD, will start exchange of financial information with over 100 jurisdictions under the Common Reporting Standards by the end of 2018.

Your Obligations as Members of IODs
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Performance Review 
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Initiatives & Strategies for achieving 2018 Tax Revenue Collection Target
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”Every Generation Of People Owe The Next Generation A Debt. This is Paid By Ensuring That We Provide Means For The Next Generation To Survive.”  - Vice President, Federal Republic of Nigeria Prof. Yemi Osinbajo SAN GCON 

It is a known fact that the decline in oil revenue contribution since 2014 to date has had an adverse effect on the ability of the country to meet her development objectives. 

We must therefore act fast now. As Chairmen, Directors and CEOs, we owe the next generation a debt. We must contribute to the survival of the next generation by performing our civic duty of simply paying our taxes. We believe that if everyone of you comply along with your companies, we will indeed take care of our generation and  the generations to come. 

This is a call for everyone to take advantage of VAIDS. We all should make sure that this opportunity does not pass us by, as truthful voluntary tax compliance is our own contribution towards the development of Nigeria. 

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