The Federal Government is pushing for a more effective implementation of tax regimes, as it tries to increase its revenues from more sustainable sources. This campaign is several years old, but it’s recently gathered considerable momentum with reforms at the Federal Inland Revenue Service (FIRS), and constant warnings of an impending end to the era of easy tax evasion and avoidance. It now seems that some of those admonitions are about to be followed by punishments for people and businesses that fail to heed them.
The
Voluntary Assets and Income Declaration Scheme (VAIDS) was devised by the government to save taxpayers from the penalties they could attract for not meeting up with their tax obligations. VAIDS, which is a time-bound amnesty for tax defaulters, is intended to allow people and companies declare and pay taxes on their income and assets which they have only partly remitted, or have not paid at all.
The scheme kicked off on July 1, 2017, and is due to end on March 31, 2018 (lasting a period of nine months). As the deadline approaches for individuals and companies to come clean on their unpaid taxes, there have been calls for the program to run for longer, but the signs are that the deadline will remain as it is. This means that entities that haven’t declared their unremitted taxes have very little time left to do so.
If for some reason you’re only minimally informed about VAIDS, or you have unpaid asset or income taxes that you know you should inform the tax authorities of, here’s a guide you can use.
Why the Federal Government Is Giving Tax Defaulters An Amnesty
VAIDS is effectively a let-off for people and businesses that didn’t pay their taxes in the past. If they declare these previously undisclosed taxes to the tax authorities before the deadline, they won’t have to pay the legal penalties for not remitting those taxes. Their sins of tax evasion and avoidance will be forgiven. The government says that it doesn’t want to simply mete out the due punishment to all offenders. They have good reasons for this.
At the start of the VAIDS programme, the
Joint Tax Board revealed that of the nearly 70 million economically active Nigerians residing in the country,
less than 15 million were tax payers. If there was going to be a tighter tax regime which doled out sanctions against offenders, majority of working age Nigerians would wind up on the wrong side of the law. VAIDS has been an effort at avoiding this.
It’s a well known fact that Nigeria has
one of the lowest tax compliance rates in the world. The government relies partly on tax revenues to function. It’ll need more of them if it’s going to survive a future in which incomes from oil exports are a fraction of what they are today. Ultimately, it aims to increase the country’s tax to GDP ratio from the current 6% to 15% by 2020. With that should come less external borrowing and a more manageable public debt profile.
Who is eligible to disclose and pay taxes under VAIDS?
Anyone living and working within Nigeria who hasn’t disclosed and paid their taxes over a period of time, are expected to do so under this programme. This includes self employed or formally employed individuals and companies.
How you can pay taxes under the scheme
If you have unpaid taxes from the past, you can declare them by filling the Declaration Form (for
individuals or
companies) and submitting it at the nearest tax office. If you’re not sure what you should pay, you could get help from those tax offices too.
Maybe you don’t have a
Tax Identification Number (TIN), so you’ve never paid tax. VAIDS offers you the chance to get one through a fast tracked process.
Once you’re done with declaring your unremitted taxes, you may proceed to pay the amounts owed to the FIRS or SBIRS (State Board of Internal Revenue Services), depending on what taxes you’re owing. Note that VAIDS covers all unpaid federal or state taxes, including Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, and Technology Tax.
Upon declaration, taxes can be paid instalmentally, over a period of up to three years (subject to the decision of the relevant tax authorities). However, interest will be paid on the outstanding balance over that period.
What could happen if you don’t take advantage of VAIDS?
The government says there will be severe consequences for failing to accept the tax amnesty offer it has made through VAIDS. Tax evaders, if convicted, could get imprisoned for five years, and will have to pay the tax owed, along with interest and penalties. The penalty could be 10% or 100% of tax due, depending on the nature of the crime.
Find out more
You can get more information aboit VAIDS at the FIRS or state internal revenue service office closest to you, or at the
VAIDS website.
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This article was first published on 21st March 2018
ikenna-nwachukwu
Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.
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