…19m Nigerians complying with obligations
Uche Usim, Abuja
Before the Voluntary Assets and Income Declaration Scheme (VAIDS), a Federal Government tax amnesty programme was launched by the Vice President, Prof Yemi Osinbajo, on June 29, 2017 (to rake in more revenue locally from non-oil sources), Nigeria was literally nowhere in tax revenue inflow.
This was more worrisome considering the decayed infrastructure, recession, dwindling oil prices, massive corruption and other blights hurting the country.
It became obvious that the nation’s economic managers had to look inward to see ways of boosting Internally Generated Revenue (IGR) through non-oil sources.
Overhauling the tax collection mechanism became inevitable because statistics show 65 million taxable Nigerians were constantly evading taxes and robbing the government the much- needed revenue to tackle other developmental challenges.
As at 2013, the number of taxpayers was 13 million out of a population of 160 million as at that time.
By 2016, the aggressive tax education and revenue drive of the Buhari administration grew the number of taxpayers to 14 million. But as at April 2018, the taxpayers base has risen to over 19 million.
The increase is partly due to the tax amnesty scheme and more awareness that has been created for taxpayers to understand it is a civic duty to pay taxes.
As the scourge of poor tax education and awareness, there was also the issue of under-declaration leading to underpayments and the Buhari administration is addressing that via compliance mechanisms.
The Chairman of FIRS, the nation’s tax organ, Mr Tunde Fowler, says well over N20 billion has so far been realised from over 262 taxpayers who have declared their assets under VAIDS, adding that the government remains determined to net $1 billion (N360 billion) from the scheme.
VAIDS, though a Federal Government initiative, is implemented in conjunction with the 36 states and the Federal Capital Territory (FCT) as a way of consolidating efforts towards improving tax collections.
The Minister of Finance, Mrs Kemi Adeosun at a recent press briefing in Abuja emphasized that revenue mobilisation remains the master key to unlocking Nigeria’s growth potential by massively financing of its huge infrastructure projects including roads, power, health and rail.
Nigeria’s tax to GDP ratio, she noted, was one of the lowest in the world compared to Ghana’s tax to GDP ratio of 15.9 per cent; India’s 16 per cent, Egypt’s 16 per cent, Mexico’s 20 per cent and South Africa’s 27 per cent.
“Regular payment of taxes by Nigerians and corporate organisations is fundamental to Nigeria’s growth and development.
We need predictable revenue inflow, which is very essential for increasing investments by the Federal and State Governments in infrastructure.
“Presently, we have 19 million taxpayers from the 65 million economically active people who are not tax compliant.
“By 2019, the growth will be stronger than the present level in 2018. We are optimistic in sustaining Nigeria’s economic growth. That is why we are driving the mobilisation of more revenues.
“There is a significant improvement in the tax payment. From individual states, when we ran statistics, in some states we found out that the figure of people paying N10 million has gone from two to 200 and those are sustainable revenue. But we really need everyone in Nigeria to get onboard to generate the funds that we all need.
“A lot of private institutions are able to fund themselves but the poorest depend on the government because they need our help. We would close this year’s budget with capital expenses of 1.5 trillion of capital”,she added.
The Minister has also revealed that the information received via the whistle-blower policy about companies who are not paying their taxes, has led to the recovery of N13.8 billion.
“We are getting far more tips on tax evasion and that is a little change we have seen and those people are being paid this month and it is the first time we have had that number of people who are not paying taxes to the FIRS”she said.
Adeosun said job creation was one of the spin-offs of the VAIDS initiative, with the scheme expected to create a total of 7,500 opportunities for Nigerians as Community Tax Liaison Officers (CTLOs) through the N-Power scheme of the Federal Government.
In addition, Adeosun said Nigeria had signed the Multilateral Competent Authority on Common Reporting Standards, which allows for exchange of financial account information.
The country, according to her, is expected to effect the first exchange by 2019 as soon as the domestic legal framework is completed.
She added: “Nigeria has adopted the Common Reporting Standards and the Addis Tax Initiative aimed at improving the fairness, transparency, efficiency and effectiveness of the tax system.
“Furthermore, as part of open government partnership, Nigeria has included in the national action plan a commitment to establish a public register of beneficial owners.
“To this end, the Corporate Affairs Commission, the custodian of Nigeria’s company registry, is pursuing relevant amendments to the Companies and Allied Matters Act to comply with global standards.
“The sole interest of the Federal and State Governments in the use of the data is in raising tax revenues. There is absolutely no hidden agenda on the use of the data,” she added.
The Minister identified the common violations by non-compliant taxpayers to include:Under-declaration of and non-declaration of income earned including income from government contracts and overseas trading; Collection of Value Added Tax (VAT) which is not duly remitted to FIRS; Charging of non-allowable personal expenses to company accounts particularly with reference to overseas school fees; Inconsistency between income declared for tax purposes and the value of assets owned.
She advised non-compliant tax payers to seek professional advice and to also consult relevant literature available from the tax authorities on tax rules.
She underscored the Federal Government’s commitment to raising tax revenues which were essential to grow the economy and create jobs for Nigerians.
She has also assured that the government has the political will to tackle tax evaders because it was shifting revenue generation to non oil sources.
The Chairman, Inter-Agency Asset Tracing Team, Gbola Sokoya at a recent Workshop in Abuja on Whistle-blower and Asset Tracing, called for strengthening on investigations mechanisms as it remains the bedrock of recovering stolen assets.
“There must be continuous training and development of the law enforcement agencies, with a view to strengthen the investigative capacities. A lot of cases have failed in court due to lack of proper investigation.
Investigation is expensive, and must be adequately funded.
“The judicial process has to be strengthened. Lack of conviction of high profile cases has been cited as a major reason why the impact of the anti-corruption war is not being felt. The international community needs assurance of our willingness to punish corrupt public officers for us to enjoy constructive collaboration”, he said.
Though President Muhammadu Buhari on April 11 announced the extension of the deadline of the Voluntary Assets and Income Declaration Scheme (VAIDS) from March 31 to June 30 to pacify professional bodies and individual taxpayers, it was gathered that some tax defaulters with weak political connections but have massive assets stashed across the globe are now in panic mode as they dread being crushed by the government’s enforcement and debt recovery machinery.
Many of the perturbed evaders include governors, senators and other influential Nigerians who have choice property in the United Kingdom.
Their fears have been heightened by the new UK regulation known as the Unexplained Wealth Orders (UWOs) which the government was leveraging on to access the property, locations and the tax compliance levels of Nigerians there.
While many have rushed to the Federal Inland Revenue Service (FIRS) and VAIDS office at the Finance Ministry to regularise their taxes before the new deadline, others have, however, remained adamant as they are banking on their links with political heavyweights for protection against prosecution. Some have also sold their property to avoid the hammer.
President Buhari, while ruling out further extension for VAIDS urged tax authorities to use the extension window to perfect plans to prosecute those who fail to regularise their tax status.
“Hiding monies overseas, evading taxes by manipulation, and other unwholesome practices, have never developed a country, and for Nigeria to attain her true potential, these must stop”, the president had said.
Finance experts have also held several seminars with their clients on VAIDS, as they decipher that the government has mustered sufficient political will to prosecute the impending tax war.
He said tax defaulters will be subjected to existing penalties enshrined in the nation’s laws once the deadline was over.
The Minister of Finance, Mrs Kemi Adeosun on her part had said there was no hiding place for tax evaders in Nigeria and overseas as the government has since launched the “Project Light House”, which entails using advanced data mining and analytics techniques to identify tax defaulters, establish their tax liabilities and send notifications.
She recently revealed that the government via Project Lighthouse, identified a batch of over 130,000 high networth individuals and companies whose records are not up to date due to detected underpayments.
“The system-wide computer software, which drives the Project Lighthouse, aggregates data from multiple sources such as bank accounts, land registry records, company registration data, tax filings, customs records and asset ownership records, among others, to identify, profile and track tax evaders”, she said in a recent seminar. in Abuja.