LIFE AFTER VAIDS
An age long popular proverb says, “make hay while the sun shines”. It is our belief that the ongoing amnesty scheme- Voluntary Assets and Income Declaration Scheme (“VAIDS” or “the Scheme”) in Nigeria can be likened to a shining sun. VAIDS is a 9 months’ programme which commenced on 1 July 2017, and is to run till 31 March 2018.
This is the last month of the Scheme and government at all levels including the Presidency, the Federal Ministry of Finance, the Federal Inland Revenue Service (FIRS), all the States Tax Authorities and the trained Community Tax Liaison Officers (CTLOs) have consistently championed the sensitization programmes across several media. Thus, leaving room for no excuses for defaulting taxpayers who refuse to take advantage of the amnesty window.
The Federal Government and tax authorities are also currently threatening fire and brimstone for defaulting taxpayers (particularly the high net worth individuals and companies) who refuse to come clean under the VAIDS.
The clock is ticking, time is fast running out and the Federal Government has reiterated that the Scheme will not be extended.
Tax is the civic responsibility of any income earning individual or company in Nigeria. It is a compulsory levy which is backed up by various laws, therefore tax default or contravention is a legal offence. It is the position of the Federal Government of Nigeria that nobody should owe or short pay the Government any tax whatsoever. VAIDS is a time limited opportunity for everyone to come clean without being penalized or prosecuted.
The following categories of individuals and companies are encouraged to come clean with their full assets, incomes and tax declarations while the amnesty period subsists:
- Full time employees with multiple undisclosed income sources e.g. people earning rent or dividends from acquired/ inherited properties or from investments in shares
- Companies with understated revenues, unpaid capital gains taxes, issuing 2 or more sets of financial statements and their directors not paying taxes commensurate with their earnings
- Users of offshore tax shelters who did not pay all taxes due before transferring such funds or owning such assets in the offshore tax shelters
- People whose current standard of living or lifestyle is inconsistent with the amount of tax declared or paid over the years
- Individuals and companies owning assets indirectly through nominees
- Those whose employment statuses/incomes are well below their exotic lifestyles and assets owned in many places in Nigeria and abroad
- Entertainers who pay minimal taxes on Nigerian earned incomes but fail to disclose incomes earned from foreign shows and sources of the funds used in acquiring the expensive houses, cars, clothing, etc. displayed by them on their Instagram accounts
- Retirees with unexplained assets
- High net worth families with complex tax situations e.g. families owning oil and gas assets or high net worth companies, with wives, sons, daughters and other relatives living luxurious lifestyles and owning assets in Nigeria and in foreign countries without commensurate individual tax payment records.
- Those who earn incomes or own assets but are yet to register for tax with the relevant tax authorities;
- Those who are registered taxpayers but have additional disclosures to make or need to amend prior disclosures, or are registered but have not been filing returns;
- Those who have not been fully declaring their taxable incomes and assets;
- Those who have been underpaying or under remitting taxes;
- Those who are under the process of tax audit or investigation with the relevant Tax Authorities; and/or
- Those who are engaged in a tax dispute with the relevant Tax Authority but are prepared to settle the tax dispute out of court.
In the aftermath of VAIDS, there would be four distinct groups of taxpayers.
- Tax compliant individuals and businesses prior to VAIDS: These are taxpayers who have been fully tax compliant before the implementation of VAIDS, and so do not have any previously undisclosed income and assets to declare.
- Taxpayers who declare fully and honestly under the VAIDS: Full and honest declaration is the requirement for grant of waivers and immunity under VAIDS. Therefore, only taxpayers who comply with the full requirements of the VAIDS will enjoy all its attendant benefits.
- Taxpayers whose declarations are false/ incomplete: Whereas taxpayers who declared their assets and incomes honestly and completely under the Scheme are absolved of all attendant liabilities, those who make false or incomplete declarations are denied the benefits of VAIDS. The relevant tax authority will deem declarations as being false or incomplete where the taxpayer does not provide satisfactory documents to support their declarations.
- Defaulting taxpayers who do not feel the need to come clean under the VAIDS: This group of taxpayers can be likened to the old English proverb, “you can lead a horse to water, but you cannot make it drink”.
For taxpayers falling under groups 3 and 4 above, consequences of non-participation in the Scheme or discontinuation of compliance after declarations are dire. They include:
- liability to pay the full amount of the principal sum due;
- liability to pay all interest and penalties arising therefrom;
- liability to be prosecuted in accordance with relevant extant laws for tax offences;
- withdrawal of any previously granted relief to the participant;
- liability to undergo comprehensive tax audit/ tax investigation;
- Defaulting taxpayers will be indicted in the federal government’s ‘name’ and ‘shame’ programme; and
- There may be widespread distrain and even sales of properties of those individuals and businesses who have not paid tax commensurate to the assets they own (as indicated by the Federal Inland Revenue Service Chairman at an event, earlier this week).
There may be no hiding place from 1 April 2018, post VAIDS, for the aforementioned groups of defaulting taxpayers.
If you need professional help with your declarations under the VAIDS, you may contact us at Vi-M Professional Solutions via email@example.com.