As the VAIDS Comes to an End; A Guide to Declaration
The Voluntary Assets and Income Declaration Scheme (VAIDS) is a time-limited opportunity for Nigerian taxpayers to regularise their tax positions relating to earlier tax periods. The Scheme, which was billed to last for nine months only, from 1st July 2017 to 31st March 2018 aims to encourage defaulting Nigerian taxpayers to voluntarily declare their previously undisclosed income and assets from sources within and outside Nigeria relating to the prior six years of assessment, and then pay the applicable tax liabilities over a defined period.
31 March is barely 24 days away, and tax drive in the country is gaining much more momentum as the taxman is now aggressively using advanced techniques to mine taxpayers data. Some of these sources of data include Bank Verification Records (BVN), foreign exchange collections from banks , land registry, company dividends, car registrations, Corporate Affairs Commission (CAC) records, foreign property ownership records, etc.
The UK has also signed the “Unexplained Wealth Order” (UWO) which became effective in January 2018. Under the UWO, properties in the UK with no justifiable source of earnings and evidence of tax payment in country of residence will be forfeited to Her Majesty’s Revenue and Customs (HMRC). There are fears that Nigerians will be largely affected by this Order.
Several letters have already been sent out by the Ministry of Finance to High Net-worth Individuals (HNI), from November last year, calling on them to take advantage of the tax amnesty before the period elapses, to rectify their tax statuses.
The Federal Government has made it clear that there will be no renewal or extension. Once the Scheme’s period has expired, all remaining tax defaulters who have not taken advantage of it will face the full force of the law.
We are providing you with this guide to VAIDS declaration, to assist you in making your declarations should you wish to take advantage of this slim window to 31 March 2018 (which we highly recommend), to rectify your tax status.
ELIGIBILITY TO PARTICIPATE IN THE SCHEME
VAIDS covers all Federal and State taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax. It also covers all taxable persons and entities including individuals, trusts, executors, registered companies and statutory companies. It is open to all persons who are in default of their tax liabilities. The Scheme is specifically targeted at taxpayers who:
- Earn an income or own assets but are yet to register with the relevant tax authorities or are registered but have not been filing returns;
- Are registered taxpayers who have additional disclosures to make or need to amend prior disclosures;
- Have not been fully declaring their taxable income and assets;
- Are under a process of tax audit or investigation with the authority; and/or
- Are engaged in a tax dispute with the relevant tax authority but are prepared to settle the tax dispute out of court.
It does not matter whether the relevant tax default arose from undeclared assets within or outside the country. If tax should have been paid, VAIDS is providing a time limited opportunity to declare the tax outstanding and resolve it definitively.
RELIEFS/BENEFITS APPROVED UNDER VAIDS
Any taxpayer who truthfully and voluntarily declares his or her assets and income, complies with the regulations and guidelines and pays all outstanding taxes shall obtain the following benefits:
- Confidentiality on any disclosed information
- Immunity from prosecution for tax offences
- Immunity from tax audit
- Waiver of interest
- Waiver of penalties, and
- Option of spreading payment of outstanding liabilities over a maximum period of three years as may be agreed with the relevant authority.
REQUIREMENTS FOR VALID DECLARATION
For an application to be valid, the following requirements must be met:
- The disclosures by the taxpayer should be voluntary
- The disclosure must be full, accurate, complete and verifiable in all material respects
- The disclosure must be made using the Voluntary Asset and Income Declaration Scheme forms or in any other form or manner as may be prescribed under the Scheme, and
- The assessment of tax payable must be carried out or checked by the relevant tax authority.
STEPS TO INCOME/ASSETS DECLARATION UNDER VAIDS
- Taxpayers can register to pay tax under the scheme by completing the VAIDS Declaration Form. Individual taxpayers should complete the Individual Form (VA1) while corporate taxpayers should complete the Corporate Form (VA2). The forms can be downloaded from the VAIDS website at vaids.gov.ng
- For taxpayers who have never paid taxes and have no Tax Identification Number (TIN)s, registration for TIN would be the first step. Their applications for a TIN will be fast tracked
- For individuals and companies not aware of how much tax they are owing, professional tax advisers or agents of the relevant Tax Authorities can help calculate the tax liabilities for the period(s) for which the taxpayers are uncertain about their tax liabilities
- All taxes paid under the Scheme are to be collected by the relevant Tax Authority, either the FIRS or SBIR depending on the type of tax in question. Payments are to be made to the Relevant Tax Authorities (through the banks as usual) quoting the full names and TIN of the taxpayers as reference. The banks will issue receipts for the payments
- Further, the tax authority will review the information supplied by the taxpayers. If they are not satisfied with the completeness, they may ask for additional information. An applicant can file an amended declaration if further tax liabilities are identified from the tax authorities’ review of the additional documents. However, all additional information must be received within the duration of VAIDS.
Note that after declaration through the Scheme, taxpayers will be expected to remain fully compliant with the tax laws. If the taxpayers fail in this regard, they may be forced to forfeit the tax forgiveness granted under VAIDS and be liable to pay past liabilities in full.
If you need professional help with your declarations under the VAIDS, you may contact us at Vi-M Professional Solutions via email@example.com.