TheCable

Nigeria, with its legions of  billionaires who own private jets and mansions home and abroad, can only boast of 214 individuals who pay up to N20 million personal tax income yearly.

At the current rates under the pay as you earn (PAYE) system, that means only 217 persons in Nigeria earn up to N105,500,000 per year — or less than N9 million per month.

In the financial and oil sectors alone, it is believed that there are thousands of managers and directors who earn more than N9 million a month.

But these incomes are often hidden in a way to avoid paying taxes on them.

This suspicion has led to the introduction of a form of tax amnesty called Voluntary Asset and Income Declaration Scheme (VAIDS).

The government is targeting an additional $1 trillion tax revenue under VAIDS, it was announced on Thursday at the end of the meeting of the National Economic Council (NEC) chaired by Vice-President Yemi Osinbajo.

The scheme will take off on May 1, 2017 and will offer a six-month window for those who are not complying with tax laws to do so.

Under VAIDS, there will be incentives to encourage early ‎participation — taxpayers will be allowed up to three ‎years to settle their liabilities.

‎NEC approved the scheme following a briefing by Kemi Adesoun, finance minister, on the underpayment of tax through the use of tax havens and other avoidance strategies.

Babatunde Fowler, Federal Inland Revenue Service (FIRS) chairman, disclosed the outcome of the NEC meeting to the media.

VAIDS is expected to simultaneously generate revenue and encourage investment and economic activity.

He said:  ‎“VAIDS scheme targets to increase the tax to GDP ratios to 18 per cent from‎ just six per cent by 2020. FIRS can ‎actually surpass NEC’s projected 15 per cent.”

He also said only 14 million Nigerians out of 40 million eligible taxpayers currently pay tax.

Fowler said a conservative revenue of US$1 billion is expected to be generated from the scheme,  adding that the VAIDS scheme will embrace all federal and states’ taxes such as companies income tax, personal income tax, petroleum profits tax, capital gains tax, stamp duties, tertiary education tax and technology tax.

It is expected to cover all back taxes without any limit to time on how far back a tax assessment can go where a taxpayer has willfully defaulted.

“It is anticipated that at least 50 per cent of the funds recovered will belong to states who are the ultimate collectors of personal income taxes. An MoU will be gazetted and signed with each state government,” Fowler said.‎

According to Fowler, underpayment of tax has been principally perpetrated by multinational companies and high net worth individuals.

In 2016, FIRS announced amnesty to companies that had failed to pay their taxes.

Over N27 billion was realised from the tax waiver programme which came from the payment of a minimum of 25 per cent of the principal of outstanding tax liabilities between 2013 and 2015 and continued payment of agreed instalments.