…FG raises prosecution team ahead of June 30 deadline
Uche Usim, Abuja
With about three weeks to the June 30 deadline of the one year tax amnesty granted defaulters to regularise their obligations, the Federal Government last week said it has set up necessary machinery to prosecute defaulterand organisations that run foul of the law.
It has already put in place a prosecution team including the Ministries of Finance and Justice, the Economic and Financial Crimes Commission (EFCC) and the Federal Inland Revenue Service (FIRS) that have since taken position to invoke the full weight of the law against willful defaulters.
The battle-ready mode of government’s tax agencies follows President Muhammadu Buhari’s directive at the extension of Voluntary Assets and Income Declaration Scheme (VAIDS) from March 31-June 30 that he would commence prosecution once the grace window was closed.
“Hiding monies overseas, evading taxes by manipulation, and other unwholesome practices, have never developed a country, and for Nigeria to attain its true potential, these must stop”, the President said in a terse statement.
Already some experts have argued that instituting legal actions against individuals and companies that refuse to take advantage of VAIDS was in order as Nigeria has one of the lowest tax to GDP ratio at 6 per cent despite its huge population.
They insist that tax evasion remains a crime punishable upon conviction by imprisonment of up to five years, while the taxpayer is still liable to pay the tax due with interest and penalties.
They have also noted that defaulters are subject to a penalty of 10 per cent of the tax due and interest at 21 per cent per annum. In some cases, the penalty is 100 per cent of the tax due and the defaulters’ assets are liable to be forfeited.
The Minister of Finance, Mrs Kemi Adeosun, for instance said the government was also working on the idea of setting up special courts to try tax offenders under the nation’s existing tax laws to ensure the process remains swift since the regular courts may have a lot cases on their hands.
She assured that there will be no sacred cows in the planned war against tax evaders as the government has mustered sufficient political will to tackle the challenge.
Adeosun 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 Light House, identified a batch of over 130,000 high net worth individuals and companies whose records are fraught with huge 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 using the N-Power scheme of the Federal Government.
She explained that VAIDS embraces all federal and state taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profit Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, Technology Tax and Tenement Rate. It also covers all back taxes for the last six years in line with the statutory periods of limitation under the relevant tax statutes.
The minister said, “VAIDS is specifically targeted at taxpayers who have not been fully declaring their taxable income/assets; have not been paying the tax due at all; have been underpaying or under remitting; are under a process of tax audits or investigations with the Relevant Tax Authority; it also covers those engaged in tax disputes with the relevant tax authority but are prepared to settle the tax dispute out of court as well as new taxpayers who are yet to register with the tax authorities. Others are existing registered taxpayers who have new disclosures to make.
“It does not matter whether the relevant tax default arose from undeclared assets within or outside the country. If tax should have been paid, the Voluntary Asset and Income Declaration Scheme is providing a once in a lifetime opportunity to declare the tax outstanding and resolve it definitively”.
Adeosun added that anyone who participates in the scheme would be free to transfer assets previously held in nominee and other names into their own name. “Many Nigerians have lost assets in the course of trying to conceal them from the authorities. Such losses typically occur in the event of death or an urgent need to liquidate assets when required documentation and proof of ownership cannot be provided.
The global focus on illicit financial flows is such that global regulations will only become tighter with time, thus this opportunity to regularise ownership of assets should be seized as proper declaration allows assets to be legally and formally held by the true owner”, she stated.
The Minister, while urging defaulters to use the few weeks left to the deadline to pay, warned that those who fail to take advantage of the scheme and are later found to have under-declared their taxes or assets will be treated as wilful tax evaders.
“They will, therefore, face the full force of the law and will not be shielded by anonymity.
“But those taking advantage of the scheme by declaring honestly and fully will be free from prosecution and will qualify for forgiveness of penalties and interest”, she added.
The Minister, who decried Nigeria’s low tax revenues which, according to her, were at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world, said there has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations.
These include transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names.
In addition, Adeosun said Nigeria had signed the Multilateral Competent Authority on Common Reporting Standards, which allows for exchange of financial accounts 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.
Already, the management teams of the FIRS and EFCC have begun mining data scientifically and tracking the assets of individuals and establishments ahead of planned legal actions.
According to Executive Chairman of the FIRS, Mr Tunde Fowler, the partnership has led to the recovery of N29 billion withholding tax from banks and other financial institutions in the country between November 2017 and March 2018.
He also hinted that N30 billion has so far been realised from VAIDS out of the $1billion (N360 billion) target.
At a recent visit to the Acting Chairman of EFCC, Ibrahim Magu, Fowler said Nigeria, just like other countries across the world, was looking inwards to raising its economic base and would not tolerate tax defaulters.
“There are some issues of non-remittance of withholding tax, Value Added Tax and Personal Income Tax. The EFCC has shown support before. When tax defaulters are invited to the EFCC office, we see result. I don’t know how you do it but we see result. Recently, two banks came forward to comply on their own.
I think that they must have heard words. We want joint assistance with the EFCC, especially on VAIDS, to make sure that all tax defaulters get the lawful treatment.
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. Meanwhile, Daily Sun learnt that fear-stricken tax evaders were beginnging to storm the VAIDS offices on a daily basis to quickly regularise their taxes to avoid government’s hammer.