…Fear grips tax evaders
Uche Usim, Abuja
The stage is being set for an impending showdown between the Federal Government’s tax authorities and notorious but highly influential defaulters in the country, who are perfecting their ways to remain invincible and continually shortchange the system.
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 properties 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 properties, 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 regularize 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 properties 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 regularize 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.
However, 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.
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 net worth 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.
Adeosun added that the Federal Government aside training and deploying 2,190 community tax liaison officers, has also engaged a leading international asset tracing and investigation agency, Kroll, to trace and track illicit flows and assets.
Job creation, she noted, 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 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 been felt. The international community needs assurance of our willingness to punish corrupt public officers for us to enjoy constructive collaboration”, he said.
Vice President, Prof Yemi Osinbajo launched VAIDS on June 29, 2017 as a way of raking in more revenue locally from non-oil sources.
The scheme, jointly implemented by federal and state governments, gave tax debtors a nine-month grace window (from July 1, 2017-March 31, 2018), to regularise their tax status without penalties or interest of any sort.
Under VAIDS, the Federal Government is targeting to bring a total of four million new taxpayers into the tax net.
VAIDS is one of the key policies being used by the Federal Government to reposition the Nigerian economy and correct inherited underdevelopment.
The country has one of the lowest tax collection rates in the world at just 6% of GDP. This was partially a function of the reliance on oil that saw us abandon the historical revenue collection systems and switch to a culture of sharing resources, rather than generating them.