FG Targets $1b from New Tax Evasion Pardon Scheme

June 25, 2017
FG Targets $1b from New Tax Evasion Pardon Scheme

FG Targets $1b from New Tax Evasion Pardon Scheme

By Dipo Olowookere

At least $1 billion is expected to be generated from a newly introduced tax evasion pardon schemed by the Federal Government.

Minister of Finance, Mrs Kemi Adeosun, was quoted in a statement issued by Deputy Director of Information in the Ministry of Finance, Mrs Patricia Deworitshe, to have said that the new initiative would be launched on Thursday, June 29, 2017.

The scheme, called Voluntary Asset and Income Declaration Scheme (VAIDS), would be jointly executed by federal and state governments and would concentrate on the national duty of all Nigerian companies and citizens to pay their taxes.

The tax awareness and compliance initiative is aimed at raising the revenue of the government, especially in this time of economic downturn.

Speaking on the initiative, the Minister said similar schemes in 2016 have been implemented successfully in India, Indonesia and South Africa.

She explained that VAIDS will bring Nigeria in line with international best practice and contribute to worldwide efforts to tackle corruption.

The Minister stated that the much needed funds would be generated and transparently invested, thereby reducing Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development.

“During the last eight years, Nigeria has failed to reduce its debt levels despite high oil prices and nominal GDP growth. We have inherited a situation where our debt and underdevelopment is getting worse not better. This cannot continue.

“Neither can the behaviour of some of our richest citizens and multinationals operating in Nigeria, who seem to consider paying tax to be optional. From 2018, international law will make it easier than ever to track these evaders down and punish them.

“This scheme is in line with similar initiatives launched during 2016 in India, Indonesia and South Africa. We know they work, we know it’s the right thing to do and the Treasury desperately needs the money.

“Finally, the proceeds of this scheme will not disappear. We will provide regular updates on the funds collected to date, and how those funds are being put to very transparent use,” Mrs Adeosun further explained.

“Anticipated funds to be raised are at least $1 billion, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development,” she stressed.

Recall that at an event in Lagos recently, Mrs Adeosun had said if the government was to grow the economy, it must make efforts at raising revenue through tax.

“If we want to grow, we must address the issue of paying tax. Our tax to Gross Domestic Product (GDP) ratio of six percent is rated one of the lowest in the world,” Mrs Adeosun had said at the programme.

The VAIDS is expected to give tax payers a time-limited opportunity to regularise their tax status without penalty.

According to Mrs Deworitshe, the plan provides a one-off opportunity for evaders to avoid the full force of the law between July 1 and December 31, 2017.

During this period evaders can regularise their tax status in exchange for immunity from prosecution of tax offences and a tax audit, and be free from penalty charges and interest.

Evaders who delay participation beyond December 31, 2017 will be liable for interest on overdue tax balances, the Finance Ministry said.

Mrs Deworitshe said under the new scheme, all tax evaders, when identified, would be subjected to the full force of Nigerian and international law, imprisonment of up to five years, severe extra penalties up to 100% of the outstanding tax due, compound interest at 21% per annum, forfeiture of assets.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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