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Taxes & Tariffs | |
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Monday, December 03, 2018/06:30PM/Deloitte
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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